Question : What are the important objectives of preparing realisation account -
(A) To close all the books of account.
(B) To record transactions relating to the sale of assets and discharge of liabilities.
(C) To determine profit or loss due to the realisation of assets and liabilities.
Option 1: (A) & (B)
Option 2: (B) & (C)
Option 3: (A) & (C)
Option 4: (A), (B) & (C)
Correct Answer: (A), (B) & (C)
Solution : Realization accounts are prepared with the intention of closing the books of the dissolved company and calculating profit or loss on the sale of assets and payment of liabilities. To prepare it, move all of the assets—aside from cash and bank accounts—to the account's debit side.
Hence the correct answer is option 4.
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