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Question

What is Realisation Account?


Solution

All assets need to be sold off and all liabilities need to be discharged off at the time of dissolution. A nominal account, known as the Realisation account is created to record the sale of such assets and the discharge of the liabilities. This account helps in ascertaining the profit or loss of the firm due to realisation of assets and liabilities at the time of termination of the business. 

Fundamentals of Accounting and Auditing

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