Question

On dissolution of a partnership firm, if realisation expenses are paid by the firm on behalf of a partner, then such expenses are debited to which of the following account:

Options

• Realisation Account

• Partner's Capital Account

• Partner's Loan Account

• Bank Account

Answer 1

Partner's Capital Account

Explanation:

When a partnership firm dissolves, any realization expenses paid by the firm on behalf of a partner are recognized as a cost of realizing assets and settling liabilities. As a result, they are credited to the Realisation Account, which is used to record all dissolution-related expenses and income.