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How is the firm's existing bank balance recorded in the Realisation Account?

Answer and explanation

Correct answer: Not recorded

The firm's existing cash or bank balance is not transferred to the Realisation Account, so it is not recorded there. Generally, non-cash assets and external liabilities are transferred to this account. Exam tip: proceeds received from selling assets are credited to the Realisation Account, but the opening bank balance itself is not.

Related tags

Partnership DissolutionRealisation AccountBank BalanceAccounting TreatmentDissolution Of A Partnership FirmAccountancyClass 12 Mcq

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