What is Realisation Account?
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Solution and Explanation
The Realisation Account is used during the dissolution of a partnership. It records the sale of the firm's assets and the settlement of its liabilities. The profit or loss from these transactions is transferred to the partners' capital accounts.
Step 2: Conclusion.
The Realisation Account helps to determine the final profit or loss on the dissolution of the partnership and ensures that all assets and liabilities are properly accounted for.
Top Questions on Realisation Account
Ekam and Akash were partners in a firm sharing profits in the ratio of 3 : 2. On 31st March, 2024 the Balance Sheet of the firm was as follows:
The firm was dissolved on above date and the assets and liabilities were settled as follows:
(a) Land and Building was taken over by the creditors as their full and final payment.
(b) Ekam accepted an unrecorded asset of ₹50,000 in full settlement of his loan.
(c) Furniture was taken over by Akash for cash payment at 5% less than the book value.
(d) Debtors were collected by a debt collection agency at a cost of ₹10,000.
(e) Bills Receivable realised ₹1,41,000.
(f) Akash agreed to bear all realization expenses. For this service Akash is to be allowed ₹1,000. Actual expenses on realization ₹2,000 was paid by Akash.
Prepare Realisation Account.
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- Realisation Account
- Amount realised from sales of assets, on dissolution of firm is recorded in:
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- When a partner takes responsibility to make payment of any outside liability of the firm, the account credited will be:
- Bihar Board XII - 2025
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- Unrecorded liabilities when paid are shown in:
- Bihar Board XII - 2025
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- Legal expenses are recorded in which side of Realisation A/c?
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- Realisation Account
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