At the time of dissolution, assuming all other items remain unchanged, what is the effect of lower realisation expenses on the result of the Realisation Account?

Correct answer: Realisation profit increases

Realisation expenses are debited to the Realisation Account. Therefore, when these expenses decrease, the debit side becomes smaller and the realisation profit increases; if the account shows a loss, the loss decreases. Option B is incorrect because higher expenses increase the loss. Exam tip: A decrease in a debit item of the Realisation Account increases profit or reduces loss.