When a firm is dissolved, goodwill account is closed by transferring to

The correct answer is: D. Realisation Account

Goodwill is an intangible asset that represents the value of a company’s reputation, customer base, and other factors that make it more valuable than the sum of its assets. When a firm is dissolved, the goodwill account is closed by transferring it to the realisation account. The realisation account is a temporary account that is used to record the sale of the firm’s assets and the distribution of the proceeds to the partners.

The other options are incorrect because:

• Option A: The capital account of the partners is a permanent account that is used to record the partners’ capital contributions and withdrawals. Goodwill is not an asset that belongs to the partners, so it cannot be transferred to their capital accounts.
• Option B: The revaluation account is a temporary account that is used to record the revaluation of assets and liabilities. Goodwill is not an asset that is revalued, so it cannot be transferred to the revaluation account.
• Option C: The profit and loss account is a temporary account that is used to record the firm’s income and expenses. Goodwill is not an expense, so it cannot be transferred to the profit and loss account.