On dissolution of a firm, on which side of the Realisation Account is the amount paid for an unrecorded liability recorded?

Correct answer: Debit side of the Realisation Account

The payment of an unrecorded liability is debited to the Realisation Account because it represents a loss or expense incurred in settling the firm’s liability during dissolution. The Cash or Bank Account is credited for the actual payment. Therefore, the debit side of the Realisation Account is correct. Exam tip: payments relating to realisation are generally recorded on the debit side of the Realisation Account.