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What is the usual effect of an expense recorded in the Realisation Account on the dissolution of a partnership firm?

Answer and explanation

Correct answer: Debited to the Realisation Account and increases the loss

Realisation expenses incurred during dissolution are debited to the Realisation Account. This increases the debit side and consequently reduces profit or increases the loss on realisation. They are not credited as an income. Exam tip: Expenses relating to realisation are generally recorded on the debit side of the Realisation Account.

Related tags

DissolutionRealisation AccountPartnership AccountsAccounting EffectsDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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