Exercises · Q7
Q.Distinguish between Realisation Account and Revaluation Account.
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Start your 14-day free trial to unlock the full solution →| Basis of distinction | Realisation Account | Revaluation Account |
|---|---|---|
| When opened | At the dissolution of the firm | At the reconstitution of the firm (admission/retirement/death) |
| What it records | Transfer of all assets and outside liabilities, and their actual sale/payment | Only the change (appreciation/depreciation) in specific assets/liabilities |
| Effect on the business | Business ends; books closed permanently | Business continues; books remain open |
| Nature of figures | Actual amounts realised/paid | Notional/estimated revised values |
| Assets/liabilities afterward | Cease to exist in the firm's books | Continue in the books at revised values |
| Sharing of profit/loss | Among all partners at dissolution, in their profit-sharing ratio | Among old partners only, in the old profit-sharing ratio |
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