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Subjects
Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessHard
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The amount received from the sale of an unrecorded asset is credited to which account?

Answer and explanation

Correct answer: Realisation Account

An unrecorded asset has no existing book balance. When it is sold, the cash or bank account is debited with the amount received and the Realisation Account is credited. Therefore, Realisation Account is correct. Cash Account is debited rather than credited. Exam tip: For an unrecorded asset sold during dissolution, credit Realisation Account with the sale proceeds.

Related tags

Partnership-DissolutionRealisation-AccountUnrecorded-AssetsClosing-BusinessAccounting-EntriesClosing 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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