State the accounting treatment at the time of dissolution of a firm for: i. Unrecorded assets ii. Unrecorded liabilities
Unrecorded assets are recorded on the credit side of the Realisation Account. If the asset is realised for cash, the Bank Account is debited and the Realisation Account is credited. If an unrecorded asset is taken over by a partner, the Partner's Capital Account is debited and the Realisation Account is credited.
Unrecorded liabilities are recorded on the debit side of the Realisation Account when they are paid. The accounting entry involves debiting the Realisation Account and crediting the Bank Account to record the settlement of these liabilities.
Explanation
The context explicitly provides the accounting treatment through multiple choice questions. Question 5 states that unrecorded assets taken over by a partner are shown on the credit side of the Realisation Account. Question 6 states that unrecorded liabilities when paid are shown on the debit side of the Realisation Account. Additionally, the text in section 4.4 explains that the Realisation Account records the sale of assets and payment of liabilities to ascertain profit or loss.