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Class 12AccountancyDissolution of a Partnership FirmClosing the BusinessExpert
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At the dissolution of a partnership firm, machinery is sold for ₹4,000 more than its book value. On which side of the Realisation Account will the sale proceeds from the machinery be recorded?

Answer and explanation

Correct answer: क्रेडिट पक्ष

The amount received from the sale of an asset during dissolution is recorded on the credit side of the Realisation Account. Receiving ₹4,000 more than the book value creates a profit, but the sale proceeds themselves are credited to the Realisation Account. The resulting profit is subsequently transferred to the partners’ capital accounts in their profit-sharing ratio. Exam tip: Record the book value of an asset on the debit side and its sale proceeds on the credit side of the Realisation Account.

Related tags

Partnership DissolutionRealisation AccountAsset DisposalAccounting EntriesProfit On RealisationClosing 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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