Question

On dissolution of firm, which item is debited to the realisation account?

Options

• Realisation expenses paid by partner

• Balance of reserve fund

• Amount of unrecorded asset

• Creditor’s balance shown in the Balance Sheet

Answer 1

Realisation expenses paid by partner

Explanation:

The Realisation Account is used to track all transactions related to the winding up of a partnership, including the sale of assets and payment of liabilities. Expenses incurred during the dissolution process, such as legal fees or advertising costs for selling assets, are considered realisation expenses and are therefore debited to this account.