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Partnership dissolution
Accountancy
What is realization A/c ? , For what it is prepared ?
Answers (2)
At the time of dissolution,the assets and liabilities of firm will realise at a certain price either at book value or more /less.it helps to distribute the remaining amount profit /loss in the realisation a/c to partners
bro ***Realization Account is prepared at the time of dissolution of a partnership firm. This account is prepared to know the profit made or loss incurred at the time of dissolution of a firm. *** All the assets except cash and bank a/c are transferred to the debit side of realization account and liabilities (not capital accounts) are transferred to the credit side of realization account. When assets are sold cash/bank A/c is debited and Realization A/c credited. *** On settling the liabilities Realization A/c is debited and Cash/Bank A/c is credited. In last if total of credit side exceeds debit side, it means there is profit and that is transferred to partner's capital accounts. In case of loss, the partners' capital accounts are debited and Realization A/c credited.
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