Question

Unrecorded liability, when paid on dissolution of a firm is debited to ______.

Options

• Partner’s Capital A/cs

• Realisation A/c

• Liabilities A/c

• Asset A/c

Answer 1

Unrecorded liability, when paid on dissolution of a firm is debited to Realisation A/c.

Explanation:

Unrecorded liabilities, when paid on the dissolution of a firm, are debited to the realisation account. This account is used to record all the assets sold and liabilities settled during the dissolution process. By debiting the realisation account, the firm reflects the payment of these liabilities as part of the winding-up process.