On the dissolution of a partnership firm, on which side of the Realisation Account is the profit arising from the sale of an asset recorded?

Correct answer: Credit side

When the amount realised from the sale of an asset exceeds its book value, the resulting profit is recorded on the credit side of the Realisation Account. It is then transferred to the partners’ Capital Accounts in their profit-sharing ratio. A loss is recorded on the debit side. Exam tip: In the Realisation Account, profit is credited and loss is debited.