If all assets are realised at their correct values but the realisation expenses are recorded at incorrect amounts, what will be the effect?

Correct answer: The profit or loss on realisation will be incorrectly determined

Realisation expenses are debited to the Realisation Account. Therefore, recording them at incorrect amounts changes the total debit and causes the profit or loss on realisation to be calculated incorrectly, even when the assets are sold at their correct values. Option B is incorrect because accurate realisation of assets alone is not sufficient; the expenses must also be recorded correctly. Exam tip: Transfer assets and record realisation expenses on the debit side, while transfer liabilities and record proceeds from assets on the credit side of the Realisation Account.