Q.Aavya, Mitansh and Praveen were partners in a firm. On 31st March, 2023, the firm was dissolved. Creditors took over furniture of book value of ₹50,000 at ₹45,000 in part settlement of their amount of ₹60,000. The balance amount was paid to them through cheque. The amount paid through cheque will be : (A) ₹10,000 (B) ₹50,000 (C) ₹45,000 (D) ₹15,000

Showing the 12 most recent of 14 on this concept.

1. CBSE 2026Set 67/3/11 markMCQ
   Q.On 31st March, 2025, the partnership between Hari and Om was dissolved. Hari was appointed to look after dissolution work for which he was allowed a commission of ₹ 9,700. He agreed to bear the dissolution expenses. The actual expenses of dissolution amounted to ₹ 8,900 which were paid by Hari's friend, Bhanu on his behalf. The amount debited to Realisation Account will be : (A) ₹ 9,700 (B) ₹ 8,900 (C) ₹ 10,000 (D) Nil

   ›Reveal solutionSolution

   The Realisation Account will be debited only with the commission payable to Hari for undertaking the dissolution work, as he agreed to bear the actual dissolution expenses personally.

   When a partnership firm is dissolved, the Realisation Account is prepared to ascertain the profit or loss arising from the realisation of assets and payment of liabilities. All expenses incurred during the dissolution process are generally debited to the Realisation Account. However, the treatment changes significantly if a partner is appointed to oversee the dissolution and agrees to bear these expenses.

   In this scenario, Hari is appointed to look after the dissolution work. For this, he is allowed a commission of ₹9,700. This commission is an expense for the firm related to the dissolution process, and thus, it will be debited to the Realisation Account.

   Crucially, Hari agreed to bear the dissolution expenses. This means that any actual expenses incurred for dissolution become Hari's personal liability, not the firm's. The firm has discharged its responsibility by paying the commission to Hari, which implicitly covers his obligation to bear the expenses. Therefore, the actual dissolution expenses of ₹8,900, even though paid by Hari's friend Bhanu on his behalf, are a personal matter for Hari. The firm's books will not record these actual expenses. The payment by Bhanu is a transaction between Bhanu and Hari, and it does not involve the firm.

   Thus, the only amount related to this arrangement that will be debited to the Realisation Account is the commission payable to Hari.

   SOLUTION

   Journal Entries

   Date	Particulars	L.F.	Debit (₹)	Credit (₹)
   2025 Mar 31	Realisation A/c		9,700
   	To Hari's Capital A/c			9,700
   	(Being commission allowed to Hari for undertaking dissolution work)
   2025 Mar 31	(No entry for actual dissolution expenses)
   	(Hari agreed to bear the dissolution expenses, so the firm is not liable for them. The payment by Bhanu on Hari's behalf is a personal transaction.)

   Watch out

   A common mistake is to debit the Realisation Account with the actual expenses of ₹8,900. This is incorrect because Hari, the partner, explicitly agreed to bear these expenses. The firm's liability is limited to the commission paid to Hari for taking on this responsibility.

   Working Notes

   1. Commission to Hari:

      Hari is allowed a commission of ₹9,700 for looking after the dissolution work. This is an expense for the firm related to the dissolution.

      • Treatment: Debited to Realisation Account, Credited to Hari's Capital Account.

   2. Actual Dissolution Expenses:

      The actual expenses amounted to ₹8,900, paid by Hari's friend Bhanu on his behalf.

      • Treatment: Since Hari agreed to bear these expenses, they are his personal liability. The firm is not concerned with these actual expenses. Therefore, no entry is passed in the firm's books for these expenses. The payment by Bhanu is a personal transaction between Bhanu and Hari.

   Based on the above, the only amount debited to the Realisation Account is the commission payable to Hari.

   ✓Final answer

   The amount debited to Realisation Account will be ₹9,700.

2. CBSE 2026Set MARCH1 mark
   Q.Write the journal entry at the time of dissolution of the firm for payment of realisation expenses.

   ›Reveal solutionSolution

   Payment of realisation expenses is recorded as Realisation A/c Dr. To Cash/Bank A/c.

   When a firm is dissolved, various expenses are incurred to realise the assets and settle the liabilities — legal fees, brokerage, advertising, commission, etc. These are debited to the Realisation Account (they reduce the realisation profit) and credited to Cash/Bank when paid.

   Journal Entry	Debit (₹)	Credit (₹)
   Realisation A/c Dr.	xxx
   → To Cash/Bank A/c		xxx
   (Being realisation expenses paid)

   ✓Final answer

   Realisation A/c Dr. To Cash/Bank A/c — being the realisation (dissolution) expenses paid.

3. CBSE 2025Set 67/5/11 markMCQ
   Q.On dissolution of a firm, there was an unrecorded asset of ₹ 15,000 which was taken over by a partner at ₹ 13,000. Partner’s capital account will be debited by : (A) ₹ 15,000 (B) ₹ 28,000 (C) ₹ 2,000 (D) ₹ 13,000

   ›Reveal solutionSolution

   The partner’s capital account is debited by ₹13,000 — the agreed takeover value of the unrecorded asset, not its original or notional value.

   Concept First: Realisation Expenses Accounting for Unrecorded Assets

   When a firm dissolves, all assets (including those not recorded in the books) are transferred to the Realisation Account. An unrecorded asset is one that was never entered in the firm’s books — perhaps an old machine, a patent, or a piece of furniture that was fully written off or never capitalised.

   The accounting treatment follows a clear rule:

   • Credit the Realisation Account with the realised value of the asset — that is, the amount at which it is sold or taken over.
   • Debit the partner’s capital account (or cash/bank) with the same amount when the asset is taken over by a partner.

   Why? Because the Realisation Account is the central clearing account for all gains and losses on dissolution. When an unrecorded asset is taken over by a partner, the firm is effectively “selling” it to that partner. The partner’s capital account is debited because the partner owes the firm that amount (it reduces their claim on the firm’s net assets). The Realisation Account is credited because the asset has been realised — it has generated value for the firm.

   Watch out

   Common Pitfall

   Many students mistakenly debit the partner’s capital account with the original value (₹15,000) or with the difference (₹2,000). Neither is correct. The debit is always the agreed takeover price — the actual consideration received from the partner. The unrecorded asset’s original value is irrelevant because it was never in the books; only the realised value matters.

   Solution: Journal Entry

   The journal entry for this transaction is:

   Date	Particulars	L.F.	Debit (₹)	Credit (₹)
   	Partner’s Capital A/c Dr.		13,000
   	To Realisation A/c			13,000
   	(Being unrecorded asset taken over by partner at agreed value of ₹13,000)

   Working Note

   Computation of the amount to be debited to partner’s capital account:

   • Unrecorded asset’s notional value (never in books): ₹15,000
   • Agreed takeover value by partner: ₹13,000
   • Amount debited to partner’s capital account = Agreed takeover value = ₹13,000

   The difference of ₹2,000 (₹15,000 – ₹13,000) is neither recorded nor adjusted anywhere — it is simply a loss that the partner bears by taking the asset at less than its notional value, but since the asset was never in the books, no loss is recognised in the Realisation Account.

   Tip

   Shortcut

   On dissolution, whenever a partner takes over an asset (recorded or unrecorded), the partner’s capital account is always debited with the agreed value — the price at which the takeover happens. The Realisation Account is credited with the same amount. Forget the book value; focus on the agreed price.

   ✓Final answer

   The partner’s capital account will be debited by ₹13,000 (Option D).

4. CBSE 2025Set 67/5/11 markMCQ
   Q.On the dissolution of the partnership firm of Raman, Hari and Suresh, realisation expenses ₹ 17,000 were paid by a debtor of ₹ 75,000 on behalf of the firm. The remaining amount was received from him along with interest of ₹ 2,000 for delayed payment. Realisation Account will be __________ by __________. (A) debited, ₹ 17,000 (B) credited, ₹ 50,000 (C) debited, ₹ 77,000 (D) credited, ₹ 60,000

   ›Reveal solutionSolution

   Realisation Account is credited by ₹ 60,000 — the net amount received from the debtor after adjusting the realisation expenses paid by him.

   Concept First: How Realisation Expenses Paid by a Debtor Are Treated

   When a firm is dissolved, the Realisation Account is the central ledger account that records all gains and losses from converting assets into cash and paying off liabilities. The rule is simple: every asset realised (cash received) is credited to Realisation Account, and every liability paid or expense incurred is debited to Realisation Account.

   Now, here the debtor of ₹ 75,000 does something unusual — he pays realisation expenses of ₹ 17,000 on behalf of the firm. This means the firm does not pay those expenses out of its own pocket; the debtor pays them directly. So the firm's cash outflow for expenses is zero, but the expense has still been incurred. The correct treatment: Realisation Account must be credited with the net cash that actually comes into the firm from this debtor.

   Let's trace the cash flow. The debtor owed ₹ 75,000. He pays ₹ 17,000 as realisation expenses to some third party (say, to the auctioneer or the bank). So the firm does not receive that ₹ 17,000. What the firm does receive is the remaining ₹ 58,000 (₹ 75,000 – ₹ 17,000) plus interest of ₹ 2,000 for delayed payment — total cash received = ₹ 60,000.

   The ₹ 17,000 expenses are not debited to Realisation Account because the firm never paid them; the debtor paid them. Instead, the debtor's liability is reduced by that amount. The net effect on Realisation Account is a credit of ₹ 60,000 (the cash actually received). The interest of ₹ 2,000 is not a realisation item — it is a separate income (credited to Realisation Account or to a separate Interest Account, but in standard dissolution accounting, it is credited to Realisation Account as part of the amount realised from the debtor).

   Watch out

   A common mistake is to debit Realisation Account with ₹ 17,000 (thinking "expenses must be debited") and credit it with ₹ 75,000 (the full debt). That would double-count the expense — the firm never paid ₹ 17,000, so it should not be debited. The correct approach: only the net cash received is credited.

   The Journal Entry

   Date	Particulars	L.F.	Debit (₹)	Credit (₹)
   	Bank A/c Dr.		60,000
   	To Realisation A/c			60,000
   	(Being amount received from debtor after adjusting realisation expenses of ₹ 17,000 paid by him and interest ₹ 2,000)

   Working Notes

   1. Amount due from debtor: ₹ 75,000

   2. Realisation expenses paid by debtor on behalf of firm: ₹ 17,000

   3. Net amount receivable from debtor after adjusting expenses:

   ₹ 75,000 – ₹ 17,000 = ₹ 58,000

   4. Interest received for delayed payment: ₹ 2,000

   5. Total cash received from debtor:

   ₹ 58,000 + ₹ 2,000 = ₹ 60,000

   6. Realisation Account treatment:

   • Credit side: ₹ 60,000 (the cash actually received)
   • No debit entry for expenses because the firm did not pay them

   Tip

   Think of it this way: the debtor's net payment to the firm is his original debt minus whatever he paid on the firm's behalf. Add any interest he pays, and that total is what credits Realisation Account.

   Why the Other Options Are Wrong

   • (A) debited, ₹ 17,000 — Wrong because the firm did not pay these expenses; the debtor paid them. Debiting Realisation would incorrectly record an expense the firm never bore.
   • (B) credited, ₹ 50,000 — Wrong because the cash received is ₹ 60,000, not ₹ 50,000. (₹ 50,000 might come from ₹ 75,000 – ₹ 17,000 – ₹ 8,000? No basis.)
   • (C) debited, ₹ 77,000 — Wrong on both counts: neither the amount nor the side is correct.

   ✓Final answer

   Realisation Account will be credited by ₹ 60,000. The correct option is (D).

5. CBSE 2025Set ANNUAL1 markMCQ
   Q.Legal expenses are recorded in which side of Realisation A/c ? (A) Debit (B) Credit (C) Liabilities (D) Assets

   ›Reveal solutionSolution

   Legal expenses paid at dissolution are realisation expenses (a cost of closing the firm), which are recorded on the debit side of the Realisation Account. Hence the answer is (A) Debit.

   For the BSEB Inter / Bihar Class-12 Accountancy syllabus, the Realisation Account records the closing of all assets and liabilities on dissolution:

   • Debit side: book value of assets transferred, and all expenses of realisation (such as legal expenses, brokerage, dissolution costs) and liabilities paid.
   • Credit side: book value of liabilities transferred, and amounts realised from sale of assets.

   The entry for legal/realisation expenses paid is:

   • Realisation A/c Dr.
   • To Cash/Bank A/c

   So legal expenses are debited to the Realisation Account. Hence option (A).

   ✓Final answer

   (A) Debit.

6. CBSE 2025Set ANNUAL1 mark
   Q.In case of dissolution of the firm, how will you treat realization expenses if paid by a partner?

   ›Reveal solutionSolution

   Realisation expenses are always an expense of the firm; if a partner pays them personally, the firm reimburses that partner through their Capital Account.

   On dissolution, expenses incurred in realising assets and settling liabilities (legal fees, auctioneer's commission, etc.) are called realisation expenses, and they are normally charged to the firm via the Realisation Account. The treatment depends on who actually pays:

   • If paid by the firm (out of Bank), it is simply: Realisation A/c Dr. To Bank A/c.
   • If paid by a partner personally (out of their own pocket, on the firm's behalf), the firm must reimburse that partner, so the entry is:

   Realisation A/c      Dr.
         To Partner's Capital A/c
   

   This correctly records the expense against the firm (debiting Realisation A/c, which ultimately affects the profit/loss on realisation shared by all partners) while crediting the specific partner's Capital A/c for the amount they are owed back — the amount is not paid out again in cash at this point; it simply increases what is due to that partner at final settlement.

   (If, however, a partner had agreed to bear realisation expenses personally, at a fixed/no remuneration, with no right to reimbursement, the firm does not record any entry for it.)

   ✓Final answer

   Realisation expenses paid by a partner are debited to Realisation A/c and credited to that partner's Capital A/c.

7. CBSE 2024Set 67/1/11 markMCQ
   Q.Aavya, Mitansh and Praveen were partners in a firm. On 31st March, 2023, the firm was dissolved. Creditors took over furniture of book value of ₹50,000 at ₹45,000 in part settlement of their amount of ₹60,000. The balance amount was paid to them through cheque. The amount paid through cheque will be : (A) ₹10,000 (B) ₹50,000 (C) ₹45,000 (D) ₹15,000

   ›Reveal solutionSolution

   The amount paid to creditors through cheque is ₹15,000 — the balance after adjusting the agreed value of furniture taken over against the total claim.

   Concept and Accounting Treatment

   When a firm is dissolved, creditors are paid off in settlement of their claims. If creditors accept an asset (like furniture) in part payment, the key rule is: the asset is taken at its agreed value, not its book value. The agreed value is what both parties have accepted as the settlement amount for that asset.

   Here, the creditors have a total claim of ₹60,000. They take over furniture with a book value of ₹50,000, but the agreed value is only ₹45,000. This ₹45,000 is the amount that reduces their claim — not the book value. The remaining unpaid balance must be paid in cash (through cheque).

   The journal entry for this transaction would be:

   Date	Particulars	L.F.	Debit (₹)	Credit (₹)
   2023 Mar 31	Creditors A/c	Dr.	60,000
   	To Furniture A/c			45,000
   	To Bank A/c			15,000
   	(Being settlement of creditors' claim — furniture taken over at agreed value of ₹45,000 and balance paid by cheque)

   Notice that the furniture account is credited with ₹45,000 (the agreed value), not ₹50,000. The loss on realisation of ₹5,000 (₹50,000 − ₹45,000) will be transferred to the Realisation Account as part of the overall dissolution process.

   Working Note

   Calculation of amount paid through cheque:

   Particulars	Amount (₹)
   Total amount due to creditors	60,000
   Less: Agreed value of furniture taken over	(45,000)
   Balance paid through cheque	15,000

   Watch out

   A common mistake is to use the book value of furniture (₹50,000) instead of the agreed value (₹45,000) when calculating the balance payable. Remember: in settlement of a claim, the agreed value is what matters — the book value is irrelevant for determining how much is still owed.

   Tip

   Think of it this way: the creditors are "selling" their claim back to the firm in exchange for furniture worth ₹45,000. The remaining ₹15,000 is the cash they still need to receive to fully settle the ₹60,000 due.

   Why the Other Options Are Wrong

   • ₹10,000 — This would be the difference between book value (₹50,000) and agreed value (₹45,000), not the balance payable.
   • ₹50,000 — This is the book value of furniture, not the amount paid.
   • ₹45,000 — This is the agreed value of furniture taken over, not the cheque amount.

   ✓Final answer

   The amount paid through cheque is ₹15,000 (Option D). The creditors' claim of ₹60,000 is reduced by the agreed value of furniture (₹45,000), leaving ₹15,000 to be paid in cash.

8. CBSE 2024Set MARCH1 mark
   Q.Who has to bear dissolution expense, at the time of dissolution of a firm?

   ›Reveal solutionSolution

   Ordinarily the firm bears dissolution (realisation) expenses, debited to the Realisation Account.

   In this GSEB Class-12 Commerce dissolution topic, expenses incurred to wind up the firm and realise its assets are called realisation/dissolution expenses. Normally the firm pays them:

   Realisation A/c ... Dr; To Cash/Bank A/c.

   If a partner has agreed to bear these expenses (with or without a fixed remuneration), then that partner bears them and the firm does not - but in the absence of such agreement, the firm bears them.

   ✓Final answer

   The firm (debited to Realisation A/c), unless a partner has agreed to bear them.

9. CBSE 2023Set 67/4/11 markMCQ
   Q.On dissolution of the firm of Ramesh, Suresh and Naresh, Naresh had agreed to bear all realisation expenses for which he was paid ₹ 14,500. Actual expenses on realisation amounted to ₹ 11,000 which were paid by Naresh. The amount to be credited to Naresh’s capital account will be : (A) ₹ 11,000 (B) ₹ 3,500 (C) ₹ 14,500 (D) ₹ 25,500

   ›Reveal solutionSolution

   The firm credits Naresh's Capital Account with the agreed remuneration of ₹ 14,500 for bearing the realisation expenses.

   During the dissolution of a partnership firm, realisation expenses are typically borne by the firm. However, it is common for a partner to agree to undertake the responsibility of bearing these expenses. In such cases, the firm often pays a fixed remuneration or commission to that partner for this service.

   Concept and Accounting Treatment of Realisation Expenses

   When a partner agrees to bear realisation expenses and is paid a remuneration by the firm for doing so, the accounting treatment in the firm's books is as follows:

   1. Remuneration paid by the firm to the partner: The amount of remuneration agreed upon and paid by the firm to the partner is considered an expense for the firm related to the dissolution process. This expense is debited to the Realisation Account, as all expenses incurred during the dissolution are ultimately charged to this account to determine the net profit or loss on realisation. The corresponding credit is given to the partner's Capital Account, as the partner is entitled to receive this amount from the firm.

      • Rule: The Realisation Account is a Nominal Account, and expenses are debited to it. The Partner's Capital Account is a Personal Account, and when the partner is a receiver of funds from the firm, their account is credited.

   2. Actual realisation expenses paid by the partner: Since the partner has agreed to bear the expenses, any actual expenses subsequently paid by that partner are their personal responsibility. The firm is not concerned with the actual amount spent by the partner, only with the fixed remuneration it agreed to pay. Therefore, these actual expenses are not recorded in the firm's books. The firm's obligation is limited to the remuneration it promised to the partner.

   In this question, Naresh agreed to bear all realisation expenses, and the firm paid him ₹ 14,500 for this. This ₹ 14,500 is the remuneration from the firm to Naresh. The actual expenses of ₹ 11,000, which Naresh paid, are his personal expenditure because he had agreed to bear them. The firm's books will only record the remuneration paid to Naresh.

   Solution

   The journal entry to record the remuneration paid by the firm to Naresh for bearing the realisation expenses is:

   Date	Particulars	L.F.	Debit (₹)	Credit (₹)
   	Realisation A/c		14,500
   	To Naresh's Capital A/c			14,500
   	(Being remuneration paid to Naresh for bearing realisation expenses)

   Working Notes:

   1. Remuneration to Naresh: The firm agreed to pay Naresh ₹ 14,500 for undertaking the responsibility of bearing all realisation expenses. This is the amount the firm owes to Naresh and is therefore credited to his Capital Account.
   2. Actual Expenses Paid by Naresh: Naresh paid ₹ 11,000 as actual realisation expenses. Since Naresh had agreed to bear these expenses, this payment is his personal liability. The firm is not concerned with this amount, and it is not recorded in the firm's books.

   ✓Final answer

   The amount to be credited to Naresh’s Capital Account is ₹ 14,500, which is the remuneration paid by the firm to him for bearing the realisation expenses.

10. CBSE 2023Set 67/4/11 markMCQ
    Q.On dissolution of a partnership firm, furniture appearing in the Balance Sheet was ₹ 2,00,000. 50% of the furniture was taken over by a partner at ₹ 65,000 and balance 50% was sold at 20% less than the book value. The amount debited to bank account was : (A) ₹ 1,45,000 (B) ₹ 80,000 (C) ₹ 65,000 (D) ₹ 1,85,000

    ›Reveal solutionSolution

    The amount debited to the Bank Account is ₹ 80,000 — this is the cash received from the sale of the remaining 50% of furniture at 20% below book value.

    Concept First: Realisation Expenses and Asset Disposal

    When a partnership firm dissolves, all assets (except cash/bank) are transferred to the Realisation Account at their book values. The Realisation Account is then credited when assets are sold or taken over, and the cash received is debited to the Bank Account.

    The key rule: Only cash inflows from asset disposal go to the Bank Account. If a partner takes over an asset, the partner's Capital Account is debited (not Bank), because no cash changes hands. The Bank Account only records actual cash receipts.

    Here, the furniture is disposed of in two parts:

    • 50% taken over by a partner — no cash involved, so Bank is not affected.
    • 50% sold to an outsider — cash is received, so Bank is debited.

    Step-by-Step Solution

    1. Calculate the Book Value of Each Half

    Total furniture book value = ₹ 2,00,000

    Each 50% portion = ₹ 2,00,000 × 50% = ₹ 1,00,000

    2. Partner's Takeover (50%)

    The partner takes over furniture worth ₹ 1,00,000 (book value) at an agreed value of ₹ 65,000.

    Since this is a takeover (not a cash sale), the entry is:

    • Debit Partner's Capital Account ₹ 65,000
    • Credit Realisation Account ₹ 65,000

    No entry in Bank Account for this transaction.

    3. Sale to Outsider (Remaining 50%)

    Book value of this portion = ₹ 1,00,000

    Sold at 20% less than book value:

    • Discount = 20% of ₹ 1,00,000 = ₹ 20,000
    • Sale price = ₹ 1,00,000 − ₹ 20,000 = ₹ 80,000

    This is a cash sale, so the entry is:

    • Debit Bank Account ₹ 80,000
    • Credit Realisation Account ₹ 80,000

    4. The Journal Entry for the Sale

    Date	Particulars	L.F.	Debit (₹)	Credit (₹)
    	Bank A/c Dr.		80,000
    	To Realisation A/c			80,000
    	(Being 50% furniture sold at 20% below book value)

    5. The Realisation Account (Furniture portion only)

    Particulars	Amount (₹)	Particulars	Amount (₹)
    To Furniture A/c (transfer)	2,00,000	By Partner's Capital A/c (takeover)	65,000
    		By Bank A/c (sale)	80,000
    		By Loss on Realisation (balancing figure)	55,000
    Total	2,00,000	Total	2,00,000

    Watch out

    A common mistake is to add the partner's takeover amount (₹ 65,000) to the cash sale amount (₹ 80,000) and think the Bank Account is debited by ₹ 1,45,000. But the partner's takeover does NOT involve cash — it's settled through the partner's capital account, not the bank. Only the cash sale of ₹ 80,000 is debited to Bank.

    Tip

    When a partner takes over an asset, think: "No cash changes hands — so Bank is not involved." The partner's capital account is debited instead. This saves you from adding takeover values to cash sale values.

    Final Answer

    ✓Final answer

    The amount debited to the Bank Account is ₹ 80,000, which corresponds to option (B). Only the cash sale of the remaining 50% furniture at 20% below book value results in a bank entry; the partner's takeover of the other 50% at ₹ 65,000 does not affect the Bank Account.

11. CBSE 2023Set ANNUAL1 markMCQ
    Q.Legal expenses are recorded in which side of Realisation A/c ? (A) Liability (B) Asset (C) Debit (D) Credit

    ›Reveal solutionSolution

    Realisation expenses such as legal charges are costs of dissolution; expenses go on the debit side of the Realisation Account.

    In a Realisation Account the debit side carries the book value of assets transferred and all expenses/payments made on dissolution (including realisation expenses like legal fees, brokerage and commission), while the credit side carries liabilities transferred and the amounts actually realised from assets. Legal expenses are a payment made to wind up the firm, so the entry is Realisation A/c Dr., To Bank/Cash — i.e. they are debited to the Realisation Account. The options 'Liability' and 'Asset' describe sides of a Balance Sheet, not a Realisation Account, so the correct description here is the debit side.

    ✓Final answer

    (C) Debit

12. CBSE 2022Set MARCH1 mark
    Q.Who has to bear dissolution expense, at the time of dissolution of a firm?

    ›Reveal solutionSolution

    Dissolution (realisation) expenses are borne by the firm and charged to the Realisation Account; if any partner agrees to bear them, that partner bears them.

    Normally: Realisation A/c Dr., To Cash/Bank A/c. If a partner has agreed to bear the expenses (with or without a fixed remuneration), the expenses are borne by that partner and no separate charge is made to the firm beyond the agreed treatment.

    ✓Final answer

    Ordinarily the firm bears the dissolution expenses (debited to Realisation A/c); where a partner has agreed to bear them, that partner bears them.