Question

What journal entry is passed for realising assets to provide cash for payment of liabilities?

• A. Respective Asset A/c (Book value) Dr.Profit and loss A/c (profit) Dr. To Bank A/c (sale proceeds) To Profit and loss A/c (Loss)
• B. Profit and loss A/c (Loss) Dr. To Respective Asset A/c (Book value)
• C. Bank A/c (Sale proceeds) A/c To Profit and loss (Loss) A/c
• D. Realisation A/c Dr.
  To Assets A/c
  
  Cash/Bank A/c Dr. To Realisation A/c

Answer 1

The correct option is D Realisation A/c Dr.

To Assets A/c

Cash/Bank A/c Dr.

To Realisation A/c

Following entry is made for transfer of assets to realisation account
Realisation A/c Dr.
To Assets A/c
(Being assets are sold)
Cash/Bank A/c Dr.

To Realisation A/c

(Being cash received on realisation of assets)