Which Journal Entry will be recorded for realization of unrecorded asset at the time of dissolution of a Partnership Firm?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Bank Account Debit & Realization Account Credit.
An unrecorded asset has no account in the books. When it is sold on dissolution, the cash comes in (Bank is debited) and the gain belongs to the realisation process, so the Realisation Account is credited, just as it is for any other asset sold:
Bank A/c Dr.
To Realisation A/c
Option (1) Bank Account Debit & Unrecorded Asset Account Credit. — Incorrect. There is no “Unrecorded Asset Account” to credit; the asset was never in the books.
Option (2) Realisation Account Debit & Bank Account Credit. — Incorrect. Realisation Dr., To Bank is the entry for paying a liability or expense, not for receiving cash.
Option (3) Unrecorded Asset Account Debit & Bank Account Credit. — Incorrect. It records buying an asset for cash, the reverse of selling it.
NCERT (2026-27 edition):
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