At the time of dissolution of a partnership firm, on which side is the balancing figure recorded when the Realisation Account shows a loss?

Correct answer: Credit side

In the Realisation Account, assets transferred and liabilities paid are generally recorded on the debit side, while liabilities transferred and proceeds from assets are recorded on the credit side. If the debit total exceeds the credit total, the account shows a loss. The difference is therefore placed on the credit side as the balancing figure, and it is subsequently transferred to the partners’ capital accounts as a loss. Exam tip: A realisation profit is balanced on the debit side, whereas a realisation loss is balanced on the credit side.