Question

Assertion (A): Loan from the wife of a partner is treated just like loan from the partner himself.

Reason (R): It is not transferred to Realisation Account.

In the context of the above two statements, which of the following is correct?

Options

• Both (A) and (R) are correct and (R) is the correct reason of (A).

• Both (A) and (R) are correct but (R) is not the correct reason of (A).

• Both (A) and (R) are incorrect.

• Only (R) is correct.

Answer 1

Both (A) and (R) are incorrect.

Explanation:

Loan from the wife of a partner is treated as an outside liability and is transferred to the realisation account, unlike the partner’s own loan which is not transferred to the realisation account but paid after outside liabilities. Hence, the statement that the loan from the wife is treated just like the partner’s loan is wrong, and the reason provided is also incorrect because loan from the wife is transferred to the realisation account.