Question

. A partner, Kapil, paid an unrecorded liability of ₹ 800. The entry passed on dissolution will

be:

(a) Dr. Kapil’s Capital A/c and Cr. Cash A/c. (b) Dr. Realisation A/c and Cr. Cash A/c. (c) Dr. Realisation A/c and Cr. Kapil’s Capital A/c

(d) None of these
​

Answer 1

Answer:

A

Explanation:

Answer 2

The correct answer to this question is option (c) Dr. Kapil's Realisation A/c and Cr. Capital A/c.

Explanation:

• On dissolution of an organization, all the books of account are shut, all assets are marketed and all liabilities are paid off.  

• In order to record the transaction of assets and release of liabilities, a nominal account is created called Realisation Account.  

• The main rationale to open Realisation Account is to determine the profit or loss due to the realisation of assets and liabilities.

• Realisation profit (credit side > debit side) or realisation loss (debit side > credit side) are reassigned to the Partner’s Capital Account in the profit-sharing ratio.