If expenses of realisation are paid by the firm in the process of realisation of assets and liability then expenses will be debited to:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) - Realisation A/c.
The following journal entry is passed if expenses of realisation are paid by the firm in the process of realisation of assets and liability:
Realisation A/c Dr.
To cash A/c
This journal entry shows that the realisation expenses are paid by the firm in cash. So, realisation account is debited.