On what account realisation account differs from revaluation account.
The Realisation Account is prepared when a firm is dissolved to ascertain the profit or loss arising from the realisation of assets and discharge of liabilities. All assets (excluding cash, bank balance, and fictitious assets) and all external liabilities are transferred to this account at their book values. It records the sale of assets, payment of liabilities, and realisation expenses. The balance in this account represents profit or loss on realisation, which is transferred to partners' capital accounts in their profit-sharing ratio.
In contrast, a Revaluation Account is prepared during reconstitution of the firm (such as admission, retirement, or death of a partner) to revalue assets and reassess liabilities. While Realisation Account is prepared on dissolution of the firm, Revaluation Account is prepared on reconstitution of the firm. The Realisation Account closes the books of the firm, whereas Revaluation Account adjusts the values without closing the firm's existence.
Explanation
The context provides detailed information about Realisation Account - its purpose (ascertaining profit/loss on dissolution), what it records (transfer of assets and liabilities, sale of assets, payment of liabilities, realisation expenses), and how the balance is distributed. The key distinction is that Realisation Account is prepared on dissolution of the firm, while Revaluation Account (though not detailed in this context) is prepared during reconstitution events like admission or retirement of partners.