A Realisation account is an accounting statement prepared during the dissolution of a partnership firm or when a business is being liquidated. Its primary purpose is to record and summarise all the financial transactions related to the disposal of assets and settlement of liabilities during this process.

This comprehensive guide will take you through the various aspects of a Realisation account, its purpose, format, and how it functions.

Understanding Realisation Account Format

A Realisation Account Format is a structured layout used in accounting to record the financial transactions that occur during the dissolution of a business or partnership. It helps in summarising the sale of assets, payment of liabilities, and distribution of any surplus or deficit among partners or stakeholders. This format ensures a systematic approach to closing the accounts of a dissolving entity.

Below is the detailed format used:

Key Components of the Realisation Account Format

1. Debit Side (Expenditures and Transfers):
   • To Assets A/C: The book value of assets sold.
   • To Realisation Expenses: Costs incurred during liquidation (e.g., legal fees, brokerage).
   • To Partners’ Capital A/C: Payments due to partners after settling liabilities.
   • To Loss Transferred to Partners: Loss on realisation distributed among partners as per their ratios.
2. Credit Side (Incomes and Receipts):
   • By Liabilities A/C: Settlement amounts for creditors and outstanding liabilities.
   • By Cash/Bank A/C: Proceeds from asset sales and cash/bank balances realised.
   • By Gains from Asset Sales: Profit earned on the disposal of assets.

Sample Realisation Account Format

Creating a Realisation Account Format in Word and Excel

Using Word to Create Realisation Account Format

• Use Word’s table feature to create a structured layout for the account.
• Include clearly defined columns for Particulars and Amount (INR) on both debit and credit sides.
• Add headers like “To Assets A/C,” “To Partner X A/C,” “By Liabilities A/C,” and “By Asset Sales Proceeds.”
• Add notes or explanations below the table for specific transactions or calculations.
• Save the document as a PDF for easy sharing or printing.
• Create a template for reuse in similar dissolution or liquidation scenarios.

Using Excel to Create Realisation Account Format

• Create a new worksheet in Excel and label it as “Realisation Account.”
• Designate two columns for Particulars and Amount (INR) for both debit and credit sides.
• Use merged cells to create sections like “To Assets A/C” and “By Liabilities A/C.”
• Add a row for the Total at the bottom of each side and use the SUM formula to calculate totals automatically.
• Add a balancing figure row labeled as “Profit/Loss” to balance the account if required.
• Apply conditional formatting to flag errors if debit and credit totals do not match.
• Include dropdown lists for common entries like asset or liability names to maintain consistency across accounts.
• Use built-in Excel formulas like =SUM() and =IF() to automate calculations for totals and discrepancies.
• Add comments to specific cells to explain unique or complex entries for clarity.
• Create a template version that can be reused for multiple scenarios by saving the file as .xltx.
• Export the completed Realisation Account to a PDF using Excel’s “Save As” or “Export” feature for easy sharing.