On dissolution of a partnership firm, if all transactions relating to the transfer and realisation of assets and the settlement of liabilities are recorded correctly in the Realisation Account, what will the balance of this account represent?

Correct answer: विघटन पर प्राप्ति से होने वाला लाभ या हानि

The Realisation Account records the transfer of assets and liabilities, sale proceeds of assets, settlement of liabilities, and realisation expenses. A credit balance represents profit on realisation, while a debit balance represents loss on realisation; the resulting amount is transferred to the partners’ capital accounts. Therefore, either profit or loss may arise, depending on the transactions. Exam tip: Remember that a credit balance means profit and a debit balance means loss in the Realisation Account.