Question

What is the object of a realisation account in dissolution of partnership?

Answer 1

The object of a realisation account in the dissolution of a partnership is to close the books of accounts by recording the realisation of assets, payment of liabilities and to determine the profit or loss on realisation. The profit or loss shown by the realisation account is then transferred to the partners’ capital accounts in their profit-sharing ratio. This helps in settling the accounts properly during the dissolution process.