If a creditor accepts an asset whose value is more than the amount du…

The correct answer is Option (1) → A, C and E only

The creditor gets an asset worth more than his dues, so he pays the excess to the firm. The firm receives this cash and credits it to the Realisation Account, as an amount realised from the asset.

Bank A/c Dr. — To Realisation A/c (excess received from the creditor)

A. He will pay excess amount — True. The book’s answer to this case is “pay”.

B. He will not pay anything — False. He must pay the difference.

C. The excess amount will be credited to Realisation Account — True. It is a gain on realisation of the asset.

D. The excess amount is debited to Realisation account — False. An amount received is credited, not debited, to the Realisation Account.

E. The excess amount is debited to Bank account — True. The cash received from the creditor is debited to the Bank Account.