Where will the realisation expenses be debited, If expenses of realisation are paid by the firm in the process of realisation of assets?
Answer & explanation
Correct answer: option 4
The correct answer is Option 4 - 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 and cash decreases so cash account is credited..