Question
Distinguish between : First and Second method of disposal of realisation account.
| 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 are closed. | Account of Liabilities and 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 dissolution, then this method is suitable. |
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| Particular | Note | $31-3-2017$ | $31-3-2016$ |
| No. | $(Rs.)$ | $(Rs.)$ | |
| Sales revenue | $33,00,000$ | $22,00,000$ | |
| Other income | $2,25,000$ | $1,50,000$ | |
| Expenses | $23,76,000$ | $15,40,000$ | |
| Income tax rate $30\%$ |