Question

An account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities. Answer in a word / phrase / term.

Answer 1

Answer: Realisation Account

Explanation:

• An account which is opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities is called Realisation account.
• Realisation account is a type of nominal account which is concerned with partnership.
• The Realisation account is opened when the firm goes into liquidation, so as to close the books of accounts.

Answer 2

Answer:

Realization account

Explanation:

An account opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities is known as the realization account.

To find out any, profit or loss on the realization of assets and payment of liabilities, a Realization Account is opened. The balance of the Realization Account (Profit or Loss) is transmitted in its profit-sharing ratio to Partners ' Capital Accounts.