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What will be the effect if a liability is mistakenly recorded as an asset in the Realisation Account?

Answer and explanation

Correct answer: वास्तविकरण लाभ गलत रूप से घट जाएगा

In the Realisation Account, assets are transferred to the debit side and liabilities to the credit side. If a liability is mistakenly treated as an asset and debited, the credit is omitted and the debit is increased; therefore, realisation profit is understated or the loss is overstated. For a liability of ₹X, the difference from the correct treatment can be ₹2X. Exam tip: remember ‘assets debit, liabilities credit’ in the Realisation Account.

Related tags

AccountancyPartnership DissolutionRealisation AccountAccounting ErrorsProfit And LossDissolution Of A Partnership FirmClass 12 Mcq

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