The correct answer is option 2- A-I, B-III, C-II, D-IV.
| LIST 1 |
LIST 2 |
| A) Transfer of assets |
I) Realisation A/c Dr.
To Assets A/c |
| B) Transfer of liabilities |
III) Liabilities Dr.
To Realisation A/c |
| C) Asset taken over by a partner |
II) Partner’s Capital A/c Dr.
To Realisation A/c |
| D) Payment of liabilities |
IV) Realisation A/c Dr.
To Bank A/c |
Realisation Account is used to record the transfers and transactions related to the dissolution of the firm. It helps in keeping track of the assets realized and the liabilities settled during the winding-up process.
* For Transfer of Assets:
All asset accounts, except for cash, bank, and fictitious assets (if any), are closed by transferring their book values to the debit side of the Realisation Account. Sundry debtors are transferred at their gross value, and any provision for doubtful debts is also transferred to the credit side of the Realisation Account, along with other liabilities. Similarly, for fixed assets, if there is a provision for depreciation account, it will be considered while transferring their values to the Realisation Account.
Realisation Account Dr.
To Assets (Individually) Account
* For Transfer of Liabilities:
All external liability accounts, including any provisions, are closed by transferring their amounts to the credit side of the Realisation Account.
Liabilities (Individually) Dr.
To Realisation Account
* For an Asset Taken Over by a Partner:
If a partner takes over an asset during the dissolution process, the value of that asset is transferred from the Realisation Account to the Partner's Capital Account.
Partner's Capital Account Dr.
To Realisation Account
* For Payment of Liabilities:
When the firm pays off its liabilities, the Realisation Account is debited, and the corresponding amount is credited to the Bank Account.
Realisation Account Dr.
To Bank Account A/c |
