Question

On dissolution, when a partner takes over an asset ______ is debited.

Options

• Realisation Account

• Partner’s Capital Account

• Cash Account

• Asset Account

Answer 1

On dissolution, when a partner takes over an asset, the partner’s capital account is debited.

Explanation:

When a partner takes over an asset on the dissolution of a firm, the partner’s capital account is debited with the value of the asset. This reflects that the partner is receiving the asset in lieu of cash, and the corresponding credit entry is made to the realisation account to remove the asset from the firm’s books.