Realisation Account is opened at the time of dissolution of a partnership firm. In this account, the assets and liabilities are transferred at their book values. Also, the firm's assets are realised and liabilities are paid off.

Why realization account is opened?

Realisation Account is opened to determine the amount of profit or loss from the realisation of assets and payment of liabilities at the time of dissolution of a partnership firm.

Which account is realization account?

Realization Account is a nominal account prepared for the purpose of calculating and distributing the profit/loss arising out of realization of assets and repayment of liabilities, at the time of dissolution of a partnership firm. Accompanied by: Capital accounts, Bank account, partners' loan account.