When a creditor accepts an asset whose value is more than the due amount, identify the entry that will be passed for the payment of cash to the firm for the difference by the creditor?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Cash A/c Dr. To Realisation A/c
When a creditor accepts an asset worth more than his dues, he pays the difference to the firm. The cash received is an inflow on realisation:
Cash (Bank) A/c Dr
To Realisation A/c
(If the asset were worth less and the firm paid the balance in cash, the entry would be Realisation A/c Dr, To Cash/Bank A/c.)
NCERT (2026-27 edition):
NCERT (2026-27 edition):
NCERT (2026-27 edition):
|
