Sita, Rita and Meeta are partners sharing profits and losses equally. On 31st March, 2022, they decided to dissolve the business. On that date, the Capital Account Balance were Sita-₹1,00,000; Rita-₹80,000 and Meeta-₹60,000. Creditors for ₹30,000 and Reserve Fund for ₹30,000 were also lying in the books of the firm while on Assets side Sundry Assets were existing at ₹2,70,000. Sundry assets included patents for ₹20,000. The tangible assets were realised at 90% of the book value while creditors were settled at 110%. Realisation expenses were ₹10,000 paid by Sita. There was an unrecorded assets of ₹5,000 which was taken over by Meeta.

Answer question on the basis of above information.

Identify the nature of Realisation A/c.

Nominal A/c

The correct answer is option 2- Nominal.

The Realisation Account helps in determining the profit or loss arising from the sale of assets during dissolution. It compares the book value of assets (recorded value) with the cash received upon selling them. Thus, realisation account follow the rule of nominal account by debiting all expenses and losses and crediting all income and gains.