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Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessHard
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An asset with a book value of ₹15,000 is sold for ₹14,000, and realization expenses of ₹500 are incurred. What is the net realization result?

Answer and explanation

Correct answer: Loss of ₹1,500

The loss on sale of the asset is ₹15,000 − ₹14,000 = ₹1,000. Adding the realization expenses of ₹500 gives a total net loss of ₹1,500. Therefore, option A is correct. Exam tip: Include both the loss on sale below book value and the realization expenses while calculating the loss on realization.

Related tags

Closing BusinessDissolutionRealisation AccountPartnership AccountingNumerical ProblemClosing The BusinessDissolution Of A Partnership FirmAccountancy
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10 more MCQs
  1. 1What is the process of permanently closing a partnership firm and ending its existence called?
  2. 2Which account is prepared at the time of dissolution of a firm to determine the profit or loss arising from the settlement of its assets and external liabilities?
  3. 3What is generally done with the assets of a partnership firm at the time of its dissolution?
  4. 4On dissolution of a partnership firm, from what are the external liabilities generally paid?
  5. 5To which account is the realisation profit transferred?
  6. 6To which account is the realisation loss transferred?
  7. 7What happens to the existence of the firm after dissolution?
  8. 8Dissolution expenses are generally debited to which account?
  9. 9At the time of dissolution, if an asset is sold for ₹10,000, what amount will be credited to the Realisation Account?
  10. 10On dissolution of a firm, to whom is the final cash balance paid after settling outside liabilities and other amounts due?
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