Question

Legal expenses are recorded in which side of Realisation A/c?

• A. Debit
• B. Credit
• C. Liabilities
• D. Assets

Hint:

Remember: In Realisation A/c, all expenses (legal, dissolution, realization expenses) are shown on the debit side.

Answer 1

The Correct Option is A

Step 1: Recall purpose of Realisation Account.
The Realisation Account is prepared at the time of dissolution of a firm. It records the realisation (sale) of assets and settlement of liabilities, as well as dissolution expenses.
Step 2: Nature of legal expenses.
Legal expenses are costs incurred during dissolution, such as lawyer’s fees, court charges, or other dissolution expenses. These are expenses.
Step 3: Debit side entries.
In Realisation A/c, the debit side records: - Book value of assets transferred, and - Any dissolution expenses (including legal expenses).
Step 4: Conclude.
Hence, legal expenses are recorded on the Debit side of Realisation A/c.
Final Answer: \[ \boxed{\text{Debit}} \]