Aman, a partner, is to bear all the expenses on realisation for which he is to be paid Rs 2,000. Aman has to pay realisation expenses of Rs 2,500. How much amount will be debited to realisation account?
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Only the amount agreed upon and reimbursed by the firm is debited to the realization account. Personal expenses of partners are excluded from firm accounts.
The realization account documents the firm's actual dissolution expenses. As Aman committed to cover these costs and receive Rs 2,000 reimbursement, the firm records Rs 2,000 as realization expenses (a debit to the realization account). The additional Rs 500 Aman paid from his personal funds is not reflected in the firm's accounts; it is a personal expense for Aman and therefore not debited to the realization account.