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mediumMCQCUET Accountancy 2025 22 May Shift 22026Accountancy
1 mark

If an asset is taken over by a creditor in full lieu of the amount due to him, then the journal entry will be:

  1. A
    Creditor A/C..Dr.To Realisation A/C
  2. B
    Realisation A/C..Dr.To Creditor A/C
  3. C
    No entry
  4. D
    Realisation A/C..Dr.To Asset A/C

Solution & Step-by-step Explanation

When an external liability (Creditor) accepts a firm's asset in satisfaction of their claim, both the liability and the asset accounts have already been transferred and closed into the Realisation Account. Because the settlement occurs internally between these transferred balances, no journal entry is required in the main journal.

Practice this question

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If an asset is taken over by a creditor in full lieu of the amount due to him, then the journal entry will be:
A
Creditor A/C..Dr.To Realisation A/C
B
Realisation A/C..Dr.To Creditor A/C
C
No entry
D
Realisation A/C..Dr.To Asset A/C

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