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Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessExpert
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What is the result when the total of the credit side of the Realisation Account exceeds the total of its debit side?

Answer and explanation

Correct answer: वास्तविकीकरण पर लाभ

The credit side of the Realisation Account records proceeds from the sale of assets and liabilities transferred to the account, while the debit side records assets transferred, liabilities discharged and realisation expenses. Therefore, an excess of credit over debit represents a profit on realisation, which is transferred to the partners’ capital accounts in their profit-sharing ratio. If the debit side exceeds the credit side, there is a loss. Exam tip: Credit more than debit means realisation profit; debit more than credit means realisation loss.

Related tags

AccountancyPartnership DissolutionRealisation AccountClosing BusinessProfit And LossPartnership AccountsClosing The BusinessDissolution Of A Partnership Firm
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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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