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When the firm’s assets are transferred to the Realisation Account, what is done?

Answer and explanation

Correct answer: Debited

At the time of dissolution, the firm’s assets are transferred at their book value to the debit side of the Realisation Account. This records the assets taken over for realisation. Crediting the assets is incorrect; the cash or bank proceeds received from selling the assets are credited to the Realisation Account. Exam tip: book value of assets transferred—debit; sale proceeds of assets—credit.

Related tags

Partnership DissolutionRealisation AccountAsset TransferAccounting EntriesClosing The BusinessDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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