Question

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

Options

• Capital Account of the Partner

• Cash Account

• Asset Account

• Realisation Account

Answer 1

On dissolution, when a partner takes over an unrecorded asset realisation account is credited. 

Explanation:

When a partner takes over an unrecorded asset during the dissolution of a firm, the realisation account is credited because the asset is being removed from the firm’s books without any cash inflow. The corresponding debit entry is made to the partner’s capital account to reflect that the partner has assumed the value of the asset, reducing the firm’s liability towards that partner.