Distinguish between Realization Account and Revaluation Account?

Revaluation Account:

  1. Meaning: Revaluation Account records the effect of re-valuation of assets and liabilities.
  2. Purpose:It is prepared to find out the net profit/loss on re-valuation.
  3. When Prepared: It is prepared at the time of admission, retirement or death of a partner.
  4. Contents: In this account only changes in assets and liabilities are recorded.
  5. Preparation of Account: This account may be prepared at a number of occasions during the life of a firm.
  6. Profit or Loss: The Profit/Loss on revaluation is transferred to old partners capital, accounts in the profit Sharing ratio.

Realization Account:

  1. Meaning: Realization Account records the realization of assets and settlement of liabilities.
  2. Purpose: It is prepared for determining net profit/loss on realization of assets and settlement of liabilities.
  3. When Prepared: It is prepared at the time of dissolution of the firm.
  4. Contents: In this account all assets and liabilities are recorded.
  5. Preparation of Account: This account is prepared only once during the life of a firm.
  6. Profit or Loss: The Profit/Loss on realization is transferred to all partner’s capital accounts.

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