On dissolution of a firm, the balance of provision for Bad Debts Account is transferred to:

The correct answer is: C. Realisation Account

A provision for bad debts is an amount that is set aside to cover the possibility that some of the firm’s debtors may not be able to pay their debts. When a firm is dissolved, the balance of the provision for bad debts account is transferred to the realisation account. This is because the realisation account is used to account for the sale of the firm’s assets and the settlement of its liabilities. The balance of the provision for bad debts account is used to offset any losses that are incurred when the firm’s assets are sold.

The other options are incorrect because:

• Option A, General Reserve Account, is incorrect because a general reserve account is a reserve that is used to meet unexpected expenses or to make capital investments.
• Option B, Debtors Account, is incorrect because the debtors account is an account that is used to record the amounts that are owed to the firm by its customers.
• Option D, Partner’s Capital Account, is incorrect because the partner’s capital account is an account that is used to record the capital that is contributed by the partners of a firm.