Jag Bhushan Sharma
(Faculty in a B-School)
(633 Points)
Replied 23 April 2014
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 realisation account and liabilities (not capital accounts) are transferred to the credit side of realisation account. When assets are sold cash/bank A/c is debited and Realisation A/c credited. On settling the liabilities Realisation 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 Realisation A/c credited. In case of doubts you can approach me on www.jbsclasses.com
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