When a partnership firm is dissolved, a Realization Account is prepared to ascertain the profit or loss on realization of assets and settlement of liabilities.
All assets (except cash/bank and fictitious assets) are transferred to the Debit side of Realization Account.
Reason for exceptions:
Cash/Bank → Not transferred because it is needed to make payments during dissolution and appears separately in the Cash/Bank Account
Fictitious Assets → Not transferred because they have no realizable value (examples: Preliminary Expenses, Discount on Issue of Shares). These are directly written off by debiting Partners' Capital Accounts
Entry for transfer of assets:
Realization A/c ... Dr
To Various Assets A/c
Since assets are being transferred to the Realization Account, they appear on its debit side (as per the rule of real accounts - what comes in is debited).