Question

Explain the accounting treatment at the time of dissolution of a partnership firm, of the assets and liabilities not already recorded in the books of the firm.

Answer 1

Some assets and liabilities might not have been recorded in the books and therefore are not shown in the balance sheet. The standard method of handling such items is as follows:

(i)	On the sale of unrecorded assets:
	Cash/Bank A/c   ...Dr.
	To Realisation A/c
	(With the amount realised on sale of unrecorded assets)
(ii)	On payment of unrecorded liabilities:
	Realisation A/c    ...Dr.
	To Bank A/c
	(With the amount paid for unrecorded liabilities)