Which of the following is transferred to Realisation Account?

Amount realised on sale of assets

The correct answer is option 3- Amount realised on sale of assets.

Amount realised on sale of assets is transferred to the credit side of Realisation A/c.

When the firm is dissolved, its books of account are to be closed and the profit or loss arising on realisation of its assets and discharge of liabilities is to be computed. For this purpose, a Realisation Account is prepared to ascertain the net effect (profit or loss) of realisation of assets and payment of liabilities which may be is transferred to partner’s capital accounts in their profit sharing ratio. Hence, all assets (other than cash in hand bank balance and fictitious assets, if any), and all external liabilities are transferred to this account. It also records the sale of assets, and payment of liabilities and realisation expenses. The balance in this account is termed as profit or loss on realisation which is transferred to partners’ capital accounts in the profit sharing ratio. The journal entry on realisation of assets-
Bank A/c Dr.
    To Realisation A/c
(Sale of assets)

OTHER OPTIONS-

• General Reserve- Credited to partner's Capital account.
• Credit Balance of Profit & Loss Account- Credited to partner's Capital account.
• Debit Balance of Profit & Loss Account- Debited to partner's Capital account.