At the time of dissolution, an unrecorded asset of the firm was realised for ₹5,000. What will be the accounting effect?

Correct answer: Realisation Account will be credited by ₹5,000 and it will be treated as a gain

When an unrecorded asset is realised, the cash or bank account is debited and the Realisation Account is credited by the amount received: Bank Account Dr. ₹5,000; To Realisation Account ₹5,000. Thus, the receipt represents a gain on realisation, which is ultimately transferred to the partners’ Capital or Current Accounts in their profit-sharing ratio. Option B shows the reverse treatment, while option C incorrectly bypasses the Realisation Account. Exam tip: Proceeds from an unrecorded asset are credited to the Realisation Account and treated as a gain.