Question

On taking responsibility for payment of realisation expenses by a partner, the account credited will be ______.

Options

• Realisation Account

• Cash Account

• Capital Account of the Partner

• None of these

Answer 1

On taking responsibility for payment of realisation expenses by a partner, the account credited will be capital account of the partner.

Explanation:

When a partner takes responsibility for the payment of realisation expenses during the dissolution of the firm, the capital account of the partner is credited. This is because the partner is assuming the liability for the expenses, which increases their obligation and reduces the firm’s liabilities. The corresponding debit entry would be made to the realisation account.