Question

realisation account kya hai

Answer 1

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Realisation Account is to ascertain the profit or loss due to the realisation of assets and liabilities


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Answer 2

Realisation Account:

• This account is prepared at the time of dissolution of a firm to know the profit/loss at the time of dissolution of the firm.

• All the assets except cash/bank are transferred to the debit side of realisation account.

•  In case any asset has a corresponding provision or reserve that is transferred to the credit side of realisation account.  Similarly all outside liabilities like creditors and loans etc. are transferred to the credit side of realisation account.

• After this money received on sale of assets are recorded on the credit side of realisation account and all payments made to outside parties are recorded on the debit side of realisation account.  If total of credit side exceeds the total of debit side, it indicates profit and vice versa.  

• The profit is credited to partners' capital accounts and realisation account is closed.