Page 12 - LN DISSOLUTION OF FIRM

(Partner’s Loan Paid)

By Partner’s Capital
A/cs

(Excess cash paid to
partner)

Distinction between Revaluation Account Realisation Account

Basic of
Difference Revaluation Account Realisation Account

It is prepared to ascertain
It is prepared to show assets profit or loss on sale of
Purpose and liabilities in the books at assets and repayment of
their revised values
liabilities

It is prepared at the time of
change in profit sharing ratio
When to be It is prepared at the time of
prepared among the existing partner, dissolution of a firm
admission, retirement and
death of a partner

This account may be prepared
Preparation at a number of times during This account is prepared
of Account once during the life of a firm
the life of a firm

This account records only those This account records all
assets and liabilities whose assets (except cash, fic-tious
Content
book values have been assets etc.) and all outside
changed liabilities

A Firm continues its business A firm comes to an end after
Result even after the preparation of preparation of realization
revaluation account. account

PREPARATION OF MEMORANDUM BALANCE SHEET

If a balance sheet on the date of dissolution is not given in the question,

there is always advisable to prepare Memorandum Balance Sheet on the

date of dissolution to ascertain the amount of balancing figure.