Question 9 of 53beginner💡 UnderstandMCQ1 mark
On dissolution of a firm, bank overdraft is transferred to:
Exercise: Test your Understanding – II | Q: 1 | (Page 6)
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Explanation
The correct option is (C) Realisation Account. Bank overdraft is classified as an outside liability of the firm. The provided context lists bank overdraft alongside creditors and loans as 'outside liabilities' that must be paid off during dissolution. Furthermore, the context mentions that liabilities like creditors and bills payables are transferred to the Realisation Account. Therefore, bank overdraft, being an outside liability, is also transferred to the Realisation Account.