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Subjects
Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessMedium
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In the Realisation Account, on which side is the amount received from the sale of investments recorded?

Answer and explanation

Correct answer: Credit

Investments are assets. The amount received on their sale is credited to the Realisation Account because it represents the proceeds realised from the asset. The book value of the investment is transferred to the debit side, but the sale proceeds are recorded on the credit side. Exam tip: remember that an asset’s book value is debited to Realisation Account, while the amount realised from its sale is credited.

Related tags

Partnership DissolutionRealisation AccountSale Of InvestmentsAccounting EntriesClosing The BusinessDissolution Of A Partnership FirmAccountancyClass 12 Mcq
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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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