For What purpose a "Realisation Account" is opened ?

On dissolution of a firm, all the books of account are closed, all assets are sold and all liabilities are paid off. In order to record the sale of assets and discharge of liabilities, a nominal account is opened named Realisation Account. The main purpose to open Realisation Account is to ascertain the profit or loss due to the realisation of assets and liabilities. Realisation profit (if credit side > debit side) or realisation loss (if debit side > credit side) are transferred to the Partner's Capital Account in their profit sharing ratio.

Concisely, following are the important objectives of preparing Realisation Account.

1) To close all the books of account.

2) To record transactions relating to the sale of assets and discharge of liabilities.

3) To determine profit or loss due to the realisation of assets and liabilities.

The main purpose to open Realisation Account is to ascertain the profit or loss due to the realisation of assets and liabilities.

On dissoluion of a firm, a realization account is opened, all proceeds from the sale of assets are credited to this account and liablities and expenses are settled through this account.

After bankruptcy and dissolution of a firm by closing all books of accounts, i.e Assets A/cs are creditted while Liability  A/cs are debitted.

When the liquidation of any company shut down all of its records and drain all the obligations are to open an account is a perception account his job to make sure the profit and loss and to determine the priorities of payment of the debt and arrange The end of the creation of this account that the assets covering all the company's obligations, or do not cover If the cover has been debts and obligations of all pay and then if anything remained to be distributed among the partners, and if these assets did not meet the