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Subjects
Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessExpert
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When a profit arises in the Realisation Account, on which side is the balancing figure shown?

Answer and explanation

Correct answer: Debit side

A profit arises in the Realisation Account when the total of the credit side exceeds the total of the debit side. To balance the account, this difference is entered on the debit side as the balancing figure and is then transferred to the partners’ capital accounts as profit. In case of a loss, the balancing figure appears on the credit side. Exam tip: remember—profit is balanced on the debit side, while loss is balanced on the credit side.

Related tags

Partnership DissolutionRealisation AccountBalancing FigureAccounting TreatmentProfit And LossClosing 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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