At the time of dissolution of a partnership firm, on which side of the Realisation Account is the loss arising from selling an asset below its book value shown?

Correct answer: Debit side of Realisation Account

When an asset is sold for less than its book value, the resulting loss produces a debit balance in the Realisation Account. This loss is then transferred to the partners’ Capital Accounts in their profit-sharing ratio by debiting those accounts. The credit side generally records the proceeds from the sale of assets, so option B is incorrect. Exam tip: A debit balance in the Realisation Account indicates a loss, while a credit balance indicates a profit.