Dissolution of Partnership occurs when all partners cease carrying on business together (partnership ends). Reasons: Expiration of partnership term, Partners' agreement, Breach of partnership deed, Court order, Insolvency. Process: Cease operations (or continue till settlement), Realize/sell assets, Pay creditors, Distribute remaining amount to partners. Realization Account: Debit: All assets at book values, Credit: Proceeds from asset sales (or values if not sold). Debit: All liabilities at book values, Credit: Amounts paid for liabilities. Balance = Gain/Loss on Realization (credited/debited to partners' capital in profit-sharing ratio). Partner Settlement Account: Shows each partner's final balance, Opening capital + profit share - drawings - loss share = amount due. Amounts Due to Creditors: Paid from partnership bank balance first. Surplus Distribution: Remaining cash after creditors paid distributed to partners in profit-sharing ratio. Deficit Distribution: If partnership is insolvent, partners may need to contribute further (if liable). Journal Entries: Transfer all assets/liabilities to Realization Account, Record sales proceeds and payments, Transfer gain/loss to capital accounts, Distribute final amounts to partners (or record as due). Balance Sheet at Dissolution: May show Realization Account and partner settlements until completion. Exam tip: Master the Realization Account mechanics; practice gain/loss calculation; understand creditor priority; handle insolvency scenarios correctly.