is bank overdraft balance is transferred to realisation a/c ??
if yes. then in the given study material (format of Realisation a/c) it is written that all the liabilities except bank overdraft...........is trans. to cr. of realisation and in the question 16 of NCERT this rule is violated.......
Niiti,
We know that Bank overdraft represents a negative bank balance. To be precise, we can say that Bank Overdraft represents a credit balance of Bank A/c. Generally, there are two practices that are followed in respect of bank overdraft in the case of dissolution of partnership firm.
First- It is transferred to the credit side of the Realisation Account similar to any other external liabilities.
Second- It is transferred to the credit side of the Bank Account.
However, both the practices are followed by accountants, but there are very few accountants, who follow the first treatment. Thus, this was the only reason that we have advised our students to follow the second pursuit which is followed by majority of the accountants.