1.4.3.4 - Preparation of Accounts
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Practice Questions
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What is the primary purpose of a Realisation Account?
💡 Hint: Think about what happens when a business closes.
Name one key component of Partners' Capital Accounts.
💡 Hint: Consider how partners contribute to the business.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the main function of a Realisation Account?
💡 Hint: Think about what happens when a business closes.
True or False: Partners’ Capital Accounts can fluctuate based on profit sharing.
💡 Hint: Consider how profits affect each partner's investment.
1 more question available
Challenge Problems
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A partnership has two partners: A and B. Partner A contributed ₹100,000, while Partner B contributed ₹150,000. After one year, due to losses, they decide to close the business, and the Realisation Account shows proceeds of ₹80,000 from the sale of assets. What should be the net distribution based on their capital contributions?
💡 Hint: Calculate based on their original investment proportions.
In a partnership, if the Realisation Account eventually has a balance of ₹0 after selling all assets and paying all liabilities, what does that indicate about the financial status of the partnership?
💡 Hint: Consider what settled accounts mean for partners involved.
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