Question

If any unrecorded liability is paid on dissolution of the firm ________ account is debited. (Fill in the blank by choosing correct option)
a) Cash / Bank A/c
b) Realisation A/c
c) Partner's Capital A/c
d) Loan A/c

Answer 1

Answer:

b) Realisation A/c

Explanation:

If any unrecorded liability is paid on dissolution of the firm the realization account is debited.

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 which can be either the profit or loss is transmitted in its profit-sharing ratio to the Partners ' Capital Accounts

Answer 2

Answer : Realisation A/c

Explanation:

• If any unrecorded liability is paid on dissolution of the firm "Realisation" account is debited.

• The Realisation account is opened when the firm goes into liquidation, so as to close the books of accounts.

• Realisation account is opened to find out the Profit or Loss on Sale of Assets and Settlement of Liabilities.