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Prepaid insurance of ₹8000 existed at dissolution and it expired worthless. What is its treatment in Realisation Account?

Answer and explanation

Correct answer: Book value debited to Realisation Account and no credit

Prepaid insurance is an asset so it is debited to Realisation Account. If nothing is realised the whole amount forms part of loss.

Related tags

AccountancyPrepaid ExpenseAssetRealisation AccountDissolution Of A Partnership FirmClass 12 Mcq

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