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At the time of dissolution of a partnership firm, what is the usual effect of the amount realised from an unrecorded asset?

Answer and explanation

Correct answer: The realisation result improves

An unrecorded asset is not included in the books before dissolution, so the amount realised from it is generally credited directly to the Realisation Account. This increases the realisation profit or reduces the realisation loss. Option D is incorrect because the amount is a realisation receipt, not an expense. Exam tip: record the realisation of an unrecorded asset on the credit side of the Realisation Account.

Related tags

Partnership-DissolutionRealisation-AccountUnrecorded-AssetsAccounting-EntriesClass-12Closing The BusinessDissolution Of A Partnership FirmAccountancy

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