Write short note : Realisation Account ?
Answers
Answer:
In the event Of dissolution of a firm, all its assets are sold away and liabilities are paid off. A Realization Account is opened in order to find out any,profit or loss on realization of assets and making payment of liabilities. In other words, to close the accounts of assets and liabilities and to calculate the profit or loss on realization of assets and settlement of liabilities, a Realization Account is prepared. The balance of the Realization Account (Profit or Loss) is transferred to Partners’ Capital Accounts in their profit sharing ratio. If debit side of this account is greater than credit side, it means there is a loss on realization, If the credit side is higher than debit side, it means there is gain on realization of assets and settlement of liabilities.
Answer:realization account is an account prepared during winding up of a company. It realises the assets and pays all the liabilities. Profit or loss on realization is transferred to partners capital a/c in old profit sharing ratio.
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