If realisation expenses decrease, with all other factors remaining unchanged, what will be the effect on the Realisation Account?

Correct answer: Realisation profit will increase

Realisation expenses are debited to the Realisation Account. Therefore, when these expenses decrease and all other items remain unchanged, the debit decreases and the realisation profit increases. Option B states the opposite effect. Exam tip: Lower realisation expenses increase profit, while higher expenses increase loss.