FA – May 2014 – L1 – SA – Q14 – Partnership Account

Identifies the account used for recording the sale of assets during partnership dissolution.

Question

In partnership business, the account maintained to determine the profit or loss arising from the sale of assets on dissolution is called
A. Revaluation Account
B. Asset Disposal Account
C. Profit or Loss Account
D. Receipt and Payment Account
E. Realisation Account

Answer

Explanation:
The correct answer is E because a Realisation Account is used during the dissolution of a partnership to record the sale of assets, settlement of liabilities, and any resulting profit or loss. This account helps determine the final distribution to partners after all assets have been liquidated and liabilities settled.

Tags: Asset Disposal, Dissolution, Partnership, Realisation Account
Level: Level 1

Topic: Partnership Accounts (Including Profit Sharing, Capital and Current Accounts)
Series: MAY 2014

Uploader: Theophilus