At the time of dissolution, if the amount realised from assets is less than the total amount paid for settling liabilities and realisation expenses, what will be the result in the Realisation Account?

Correct answer: Loss

When the amount realised from assets is less than the payments made to settle liabilities and meet realisation expenses, the debit side of the Realisation Account exceeds its credit side, resulting in a loss. Merely having high liabilities does not automatically prove a loss; the realised assets must be compared with the related payments. Exam tip: A higher credit side indicates profit, while a higher debit side indicates loss in the Realisation Account.