The correct answer is B. Credit.
When a firm is dissolved, the assets are transferred to the realisation account. The realisation account is a temporary account that is used to record the sale of the assets of the firm. The assets are sold at a value that is different from their book value. The difference between the sale value and the book value is recorded in the realisation account. If the sale value is greater than the book value, the realisation account is credited. If the sale value is less than the book value, the realisation account is debited.
The realisation account is then closed to the capital accounts of the partners. The partners’ capital accounts are debited or credited for their share of the profit or loss on the realisation of the assets.
Here is a more detailed explanation of each option:
- Option A: Debit. This is incorrect because the realisation account is a credit account.
- Option B: Credit. This is the correct answer because the realisation account is a credit account.
- Option C: Debit or Credit. This is incorrect because the realisation account is a credit account.
- Option D: None of the above. This is incorrect because the realisation account is a credit account.