Question

Preliminary expenses are transferred by the vendor company at the time of absorption to

Answer 1

Answer:

The demand and supply are inversely related to each other. When the supply is more than demand than the prices of goods and services tend to fall. Similarly when the demand is more than supply the prices of goods and services tend to rise. This is how the supply and demand are inversely related.

Answer 2

Answer:

Concept:

The vendor company transfers preliminary expenses (at the time of absorption) to Realisation account.

Find:

Preliminary expenses are transferred by the vendor company at the time of absorption to

Given:

Preliminary expenses are transferred by the vendor company at the time of absorption to

Explanation:

The vendor company transfers preliminary expenses (at the time of absorption) to Realisation account.

On dissolution of a firm, all the books of account are closed, all assets are sold and all liabilities are paid off. In order to record the sale of assets and discharge of liabilities, a nominal account is opened named realisation account. The main purpose to open realisation account is to ascertain the profit or loss due to the realisation of assets and liabilities. Realisation profit (if credit side > debit side) or realisation loss (if debit side > credit side) are transferred to the partner's capital account in their profit sharing ratio. Concisely, following are the important objectives of preparing realisation account

(i) To close all the books of account.

(ii) To record transactions relating to the sale of assets and discharge of liabilities.

(iii) To determine profit or loss due to the realisation of assets and liabilities.

Features of Realisation Account

(i) In realisation account, sale of assets is recorded at their realised value.

(ii) Payment to liabilities (creditors) is recorded at their settlement value.

(iii) After all the transactions have been recorded, there will be balance, which may be profit or loss.

(iv) Profit arises in two situations

(a) When assets are realised at more than their book value.

(b) When liabilities are settled at less than their book value.

(v) If the two are vice versa, the net result will be loss.

#SPJ3