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Answer» Difference between first and second method of disposal of realisation account is as under: | Points | First Method | Second Method | | 1. Realisation Account | After closing the assets and liabilities accounts, they are transferred to Realisation account. | In Realisation Account, assets and liabilities accounts are not transferred. | | 2. Accounts | Liabilities and Assets accounts | Accounts of Liabilities and are closed. Assets are not closed. | | 3. Realisation of Assets | On credit side of Realisation Account, the realised value on sale of asset are recorded. | Realised value of the assets is credited to assets account and the balance is transferred to Realisation Account. | | 4. Payment of Liability | On debit side of Realisation Account payment for the liability is shown. | If liability is debited to that liability A/c. the amount paid towards it is transferred to Realisation Account. | | 5. Circumstances | If the liabilities are paid immediately and the assets are realised immediately on dissolution, then this method is suitable. | If the payment of liability and the realisation of assets are made in instalments on disso lution, then this method is suitable. |
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