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Question
At the time of dissolution, if it not given whether loan to partner is received or not, Loan to Partner is ______.
Options
transferred to Realisation Account.
transferred to Partner’s Capital Account.
transferred to Partner’s Current Account.
received from the partner.
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Solution
At the time of dissolution, if it not given whether loan to partner is received or not, Loan to Partner is transferred to Partner’s Capital Account.
Explanation:
A “Loan to Partner” is an asset for the firm because the partner owes this money back. At the time of dissolution, if the question is silent about its recovery, the firm does not collect it in cash or put it in the Realisation Account. Instead, the firm directly recovers this loan by deducting it from the partner’s final dues. This is done by transferring the loan balance to the debit side of the Partner’s Capital Account, which automatically reduces their total capital payout.
