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Question
All external liability accounts including provisions, if any, are closed by transferring them to the credit of _________ account.
All external liability accounts including provisions, if any, are closed by transferring them to the credit of _________ account.
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Solution
The correct option is C Realisation
The total amount of debts payable by a business to the outsiders (other than the owners) are called external liabilities. All external liability accounts including provisions, if any, are closed by transferring them to the credit of Realisation account. The journal entry for transfer of liabilities is :Liabilities A/c Dr. To Realisation A/c
The total amount of debts payable by a business to the outsiders (other than the owners) are called external liabilities. All external liability accounts including provisions, if any, are closed by transferring them to the credit of Realisation account. The journal entry for transfer of liabilities is :
Liabilities A/c Dr.
To Realisation A/c
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