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why not pass cash/bank balance entery in realistion a/c on debit side why why .......

At the time of dissolution of a partnership firm, in order to ascertain aggregate profit or aggregate loss due to sale of assets and repayment of liabilities, we need to prepare the Realisation Account. For this, all assets (except Cash/Bank, fictitious assets, Debit balance of P and L A/c, partner Capital A/c, Current A/c, Loan to Partner) and all liabilities (excluding Partner Capital account, reserves, P and L A/c, Current A/c, Loan to Partner) are closed by transferring their respective balances to the Realisation Account.

As mentioned above, Cash, Bank and Bank Overdraft balances are not transferred to the Realisation Account. This is because only those assets are transferred to the Realisation Account, which can be realised and can be converted into cash or bank.

This can also be understood in another way as, only those assets are transferred to the Realisation Account that have the probability of either losing values (depreciation, such as machinery, etc.) or gaining values (appreciation, such as buildings, goodwill, etc.), when they are sold or realised. The Cash and Bank balances are the most liquid assets, hence; no need to realise them further. Moreover, these balances remain steady and it is less probable that the values of Cash and Bank will change over a period of time.

 However, if in the question, it is mentioned that the “business of the partnership firm is sold with all assets and liabilities”, then similar to all other assets, Cash and Bank balances will also be tansferred to the Relisation Account. Although the topic of “selling of business with cash and bank balances” is not included in the syllabus of Class-XII of CBSE, yet this will enhance your conceptual understanding for higher studies.

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Realisation Account is prepared to record realisation of assets & liabilities, and closing accounts of them. At the closure of the business assets of the firm are sold and all outsiders' liabilities are paid.

This account records the amounts for which various assets are sold in the market or otherwise disposed and how these amounts are used for payment of liabilities. But Cash and Bank Balances are not to be sold. They are already in liquid form. It is the reason why these are not transferred to the Realisation Account.

But if business itself is sold with all assets including Cash and Bank Balances, then it should also be transferred to the debit side of the Realisation Account.

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realisation a/c is prepared to record the realised values of assets and liabilities it is an account used to record the disposal of an asset or assets and to determine the profit or loss on the disposal.
cash and bank accounts will not be transferred to realisation account because they are not to be realised-they can be distributed in their present form instead a seprate cash and bank account will be opened with the balances as appearing in the last balancesheet.but if business is sold with all assets including cash/bank balances,only then it should be transferred to the debit side of realisation account.

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