Which of the following statements are correct?

(A) Revaluation Account and Realisation Account are one and the same
(B) Realisation Account is prepared at the time of Dissolution of Firm
(C) Realisation Account is prepared at the time of Dissolution of Partnership
(D) Revaluation Account is prepared at the time of Dissolution of Firm
(E) Revaluation Account is prepared at the time of Dissolution of Partnership

Choose the correct answer from the options given below:

(B) and (E) only

The correct answer is Option 2 - (B) and (E) only.

(A) Revaluation Account and Realisation Account are one and the same- This statement is incorrect. Revaluation account and realisation account is different. Revaluation account can be made because it is prepared in case of dissolution of partnership only not firm. Realisation account is made once in lifetime because business is closed after dissolution of firm.

(B) Realisation Account is prepared at the time of Dissolution of Firm- This statement is correct. 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.

(C) Realisation Account is prepared at the time of Dissolution of Partnership- This statement is incorrect.  Revaluation account is prepared for the dissolution of partnership reassess the assets and liabilities of the firm.

(D) Revaluation Account is prepared at the time of Dissolution of Firm- This statement is incorrect. It is prepared in case of dissolution of partnership not firm.

(E) Revaluation Account is prepared at the time of Dissolution of Partnership- This statement is correct. Revaluation account is prepared in case of dissolution of partnership to reassess the assets and liabilities of the firm.