How to Prepare Realisation Account

Realisation account is made at the time of dissolution of partnership.This account is prepared for finding the profit or loss on getting amount from selling of all assets and paying amount of liabilities.

1. Assets Transfer at Book Value 

When partnership dissolve, we close all the accounts of assets by sending them to the debit side of  realisation account. Cash and bank account are not transferred to realisation account but if it is bought by buying company, then these accounts will also transfer to realisation account. We transfer all the assets to realisation account on its book value.

2. Provisions  Transfer 

We transfer all the reserves, provisions in its credit side. For example, we transfer provision for doubtful debt account, provision for depreciation account, investment fluctuation fund account and joint life policy reserve account in its credit side.

3. Capital Transfer 

In the balance sheet, debit balance of profit and loss which is shown in the asset side, will not transfer to realisation account but we will transfer it to capital account's debit side. After this, capital accounts will be transferred to the credit side of realisation account. Like this, if balance sheet is showing credit balance of profit and loss account and reserve and surplus in its liabilities side, we will not transfer it to realisation account. We will transfer it to capital accounts of partners and then these capital account will be credited to realisation account.

4. Cash Received from Sale of Assets 

All the cash which we receive from sale of assets will be transferred to the credit side of realisation account.

5. Cash Payments of Liabilities 

All the cash which we pay for liabilities will be transferred to the debit side of realisation account.

6. Expenses of Realisation 

All the expenses of realisation will be shown in the debit side of realisation account.

7. Take Over Liabilities or Assets by Partner 

If any partner has taken over any liability, then, that partner's capital account will be debited in realisation account.

If any partner has taken over any asset, then, that partner's capital account will be credited in realisation account.

8. Closing the Realisation Account 

We will compare the debit balance of realisation account with the credit balance of realisation account. Difference between debit balance and credit balance will go to partner's capital account.. This will be profit or loss on realisation and it will be divided into profit and loss sharing ratio.

Related : Accounting Treatment at the Time of Dissolution of Partnership

COMMENTS

Comments on this Website: 4
Loading...
.
Share above Content to Your Friends



Name

access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting interest international Internet Introduction of Tally 9 inventory investment invoice IT Japan Job costing journal entries Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting otcei pakistan parents pay pal pdf pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
false
ltr
item
Accounting Education: How to Prepare Realisation Account
How to Prepare Realisation Account
Accounting Education
http://www.svtuition.org/2013/03/how-to-prepare-realisation-account.html
http://www.svtuition.org/
http://www.svtuition.org/
http://www.svtuition.org/2013/03/how-to-prepare-realisation-account.html
true
2410664366776677676
UTF-8
Not found any lecture VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at vinod@svtuition.org for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock