Difference between Revaluation Account and Realisation Account

What are the major differences between Revaluation Account and Realisation Account?

Revaluation account and realisation account are two different accounts that are used in accounting to help keep track of the value of a company’s assets.

The main difference between the two is that Revaluation Account is used to show the changes in the value of a company’s assets, while Realisation Account is used to show the profits or losses made when the company sells its assets.

Before we move to the differences, let’s understand what are Revaluation Account and Realisation Account:

  • Revaluation Account: Revaluation Account is an account that is used to show the changes in the value of a company’s assets over time. This can include things like land, buildings, and equipment.
  • Realisation Account: Realisation Account is an account that is used to show the profits or losses made when a company sells its assets. This can include things like selling a piece of equipment or land.

Revaluation Account vs Realisation Account

Now, let’s move to Revaluation Account vs Realisation Account:

Major differences between Revaluation Account and Realisation Account

Revaluation Account Realisation Account
Revaluation Account is used to show changes in value. Realisation Account is used to show profits or losses.
Revaluation Account is concerned with the value of a company’s assets. Realisation Account is concerned with the sale of those assets.
Revaluation Account is used to update the value of assets on the balance sheet. Realisation Account is used to show the financial impact of selling those assets.
Revaluation Account is used to reflect changes in the market value of assets Realisation Account is used to show the actual amount of money received or paid when assets are sold.
Revaluation Account is used to help a company understand the current value of its assets. Realisation Account is used to understand the financial impact of selling those assets.

That’s it.

Note that sometimes, the question might also be asked as “distinguish between Revaluation Account and Realisation Account”.

Also see:

Final words

Revaluation Account and Realisation Account are two different accounts that are used in accounting to help a company understand the value and financial impact of its assets.

Revaluation Account is used to show the changes in the value of a company’s assets, while Realisation Account is used to show the profits or losses made when those assets are sold. It’s important for a company to keep track of both of these accounts in order to make informed financial decisions.

You can view other “differences between” posts by clicking here.

If you have a related query, feel free to let us know in the comments below.

Also, kindly share the information with your friends who you think might be interested in reading it.

References:

Leave a Reply

Your email address will not be published. Required fields are marked *