{"id":1685,"date":"2019-07-03T08:52:36","date_gmt":"2019-07-03T08:52:36","guid":{"rendered":"https:\/\/commerceiets.com\/?p=1685"},"modified":"2019-07-03T08:52:36","modified_gmt":"2019-07-03T08:52:36","slug":"realisation-account","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/realisation-account\/","title":{"rendered":"REALISATION ACCOUNT"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_64 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/realisation-account\/#MEANING\" title=\"MEANING\">MEANING<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/realisation-account\/#STEPS_TO_PREPARE_REALISATION_ACCOUNT\" title=\"STEPS TO PREPARE REALISATION\nACCOUNT\">STEPS TO PREPARE REALISATION\nACCOUNT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/realisation-account\/#FORMAT_OF_REALISATION_ACCOUNT\" title=\"FORMAT OF REALISATION ACCOUNT\">FORMAT OF REALISATION ACCOUNT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/realisation-account\/#DIFFERENCE_BETWEEN_REVALUATION_ACCOUNT_AND_REALISATION_ACCOUNT\" title=\"DIFFERENCE BETWEEN REVALUATION ACCOUNT AND REALISATION ACCOUNT\">DIFFERENCE BETWEEN REVALUATION ACCOUNT AND REALISATION ACCOUNT<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"MEANING\"><\/span>MEANING<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-medium-font-size\">Realisation Account is a nominal\naccount which is prepared at the time of dissolution of firm. It is prepared to\nfind out the profit or loss realized by the firm on its closing or shutting\ndown. Being a nominal account, it is credited with all the incomes and debited\nwith all the expenses.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">Firstly, all the assets are\ntransferred to the debit side and all the liabilities are transferred to the\ncredit side of this account Then the assets realized resulting into income\nearned are posted on the credit side and the liabilities paid off resulting in\nexpenditure is posted on the debit side of this account. The net result will be\neither profit or loss which is distributed among the partners in their profit\nsharing ratio.<\/p>\n\n\n\n<p class=\"has-medium-font-size\">The purpose of preparing this\naccount is to close the books of accounts of the dissolved firm and to\ndetermine the gain or loss on the realisation of assets and liabilities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"STEPS_TO_PREPARE_REALISATION_ACCOUNT\"><\/span>STEPS TO PREPARE REALISATION\nACCOUNT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 1:<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Transfer all the assets except\ncash\/bank balance, fictitious assets, Debit balance of Profit and Loss A\/c,\nDebit balance of Partner\u2019s Capital\/ Current A\/cs, Loan to partner).<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 2:<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Transfer outside liabilities to the\ncredit side of Realisation Account.<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 3: <\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Show the disposal of assets at\nthe credit side of realisation account, with the actual amount realized.<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 4:<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Make the payment of the\nrealisation expenses at the debit side of realisation account.<\/p>\n\n\n\n<p class=\"has-background has-light-green-cyan-background-color\"><strong>STEP 5:<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Show the payment of outside\nliabilities at an agreed value or the book value at the debit side of\nRealisation Account.<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 6: <\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Show the disposal of unrecorded\nassets at the credit side of realisation account.<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 7: <\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Show the payment of unrecorded\nliabilities at the debit side of Realisation Account.<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 8:<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Transfer investment Fluctuation\nreserve, Joint Life Policy reserve, Depreciation reserve, to the credit of\nrealisation account, if assets corresponding to these funds appear to the\nassets side of Balance Sheet.<\/p>\n\n\n\n<p class=\"has-background has-medium-font-size has-light-green-cyan-background-color\"><strong>STEP 9:<\/strong><\/p>\n\n\n\n<p class=\"has-medium-font-size\">Close the realisation Account.\nExcess of credit side over debit side represents profit will be transferred to\nthe credit side of Partner\u2019s Capital Accounts. Excess of debit side over credit\nside is loss which will be transferred to the Debit side of Partner\u2019s Capital\nAccounts.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FORMAT_OF_REALISATION_ACCOUNT\"><\/span>FORMAT OF REALISATION ACCOUNT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td><strong>   PARTICULARS   <\/strong><\/td><td>\n  <strong>\u20b9<\/strong>\n  <\/td><td><strong>   PARTICULARS   <\/strong><\/td><td>\n  <strong>\u20b9<\/strong>\n  <\/td><\/tr><tr><td>To Land &amp; Building A\/c   <br \/>To Plant &amp; Machinery A\/c   <br \/>To Furniture A\/c   <br \/>To Stock A\/c   <br \/>To Debtors A\/c   <br \/>To Goodwill A\/c   <br \/>To Investment A\/c   <br \/>To Bank\/ Cash A\/c (Liabilities Paid):   <br \/>     Sundry Creditors   <br \/>     Bill Payable   <br \/>     Outstanding Expenses   <br \/>     Bank Loan, <br \/>    Overdraft, <br \/>    Cash Credit  <br \/>To Bank\/ Cash A\/c <br \/>(Realisation Expenses)   <br \/>To Partner\u2019s Capital A\/c <br \/>(Realisation Expenses)   <br \/>To Partner\u2019s Capital A\/cs   <br \/>(Profit on Realisation)   <\/td><td>\n  &nbsp;\n  <\/td><td>By Provision for Doubtful Debts A\/c   <br \/>By Sundry Creditors A\/c   <br \/>By Bills Payable A\/c   <br \/>By Outstanding Expenses A\/c   <br \/>By Bank Loan, Overdraft, Cash Credit A\/c   <br \/>By Bank\/ Cash A\/c (Assets realized):   <br \/>     Land and Building   <br \/>     Plant and Machinery   <br \/>     Furniture   <br \/>     Stock   <br \/>     Debtors   <br \/>     Bad Debts recovered   <br \/>     Investment   <br \/>By Partner\u2019s Capital A\/cs <br \/>(assets taken over)   <br \/>By Partner\u2019s Capital A\/cs   <br \/>(Loss on Realisation)   <\/td><td>\n  &nbsp;\n  <\/td><\/tr><tr><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><td>\n  &nbsp;\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"DIFFERENCE_BETWEEN_REVALUATION_ACCOUNT_AND_REALISATION_ACCOUNT\"><\/span>DIFFERENCE BETWEEN <a aria-label=\"REVALUATION (opens in a new tab)\" href=\"https:\/\/commerceiets.com\/revaluation-account\/\" target=\"_blank\" rel=\"noreferrer noopener\">REVALUATION<\/a> ACCOUNT AND REALISATION ACCOUNT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td><strong>   BASIS OF DIFFERENCE   <\/strong><\/td><td><strong>   REVALUATION ACCOUNT   <\/strong><\/td><td><strong> REALISATION ACCOUNT   <\/strong><\/td><\/tr><tr><td><strong>   MEANING   <\/strong><\/td><td>\n  It records the effect of revaluation and\n  reassessment of liabilities.\n  <\/td><td>\n  It records the realisation of assets and\n  settlement of liabilities.\n  <\/td><\/tr><tr><td><strong>   PURPOSE   <\/strong><\/td><td>\n  It is prepared to make necessary adjustments in\n  the value of assets and liabilities.\n  <\/td><td>\n  It is prepared for calculating net profit\/ loss\n  on realisation of assets and settlement of liabilities.\n  <\/td><\/tr><tr><td><strong>   TIME   <\/strong><\/td><td>\n  It is prepared at the time of reconstitution of\n  firm i.e. at the time of admission, retirement or death of a partner.\n  <\/td><td>\n  It is prepared at the time of dissolution of\n  partnership business.\n  <\/td><\/tr><tr><td><strong>   CONTENTS   <\/strong><\/td><td>\n  In this account, only changes in the value of\n  assets and liabilities are recorded.\n  <\/td><td>\n  In this account, all the assets and liabilities\n  are recorded.\n  <\/td><\/tr><tr><td><strong>   PREPARATION OF ACCOUNT   <\/strong><\/td><td>\n  This account may be prepared at a number of\n  occasions during the life of the firm.\n  <\/td><td>\n  This account is prepared once in the lifetime of\n  the firm i.e. at the time of its closure.\n  <\/td><\/tr><tr><td><strong>   RESULT   <\/strong><\/td><td>\n  Even after the preparation of Revaluation Account\n  the firm continues to function, though with a changed relationship among the\n  partners.\n  <\/td><td>\n  The firm comes to an end after the preparation of\n  this account.\n  <\/td><\/tr><tr><td><strong>   CLOSING OF ACCOUNTS   <\/strong><\/td><td>\n  Accounts of assets and liabilities shown in this\n  account are not closed.\n  <\/td><td>\n  Accounts of assets and liabilities transferred\n  here are closed.\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>MEANING Realisation Account is a nominal account which is prepared at the time of dissolution of firm. It is prepared to find out the profit or loss realized by the firm on its closing or shutting down. Being a nominal account, it is credited with all the incomes and debited with all the expenses. Firstly,&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/realisation-account\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;REALISATION ACCOUNT&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":1687,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19,21],"tags":[61,62,63],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1685"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=1685"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/1685\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/1687"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=1685"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=1685"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=1685"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}