On taking responsibility for payment of a liability of ₹16,000 by a partner at the time of dissolution of partnership firm, which account will be credited?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Capital Account of the Partner.
For a liability which a partner takes responsibility to discharge,the journal entry will be-
Realisation A/c Dr.
To Partner’s Capital A/c
Now the partner took responsibility for payment of a liability of ₹16,000. So journal entry will be-
Realisation A/c Dr. ₹16,000
To Partner’s Capital A/c ₹16,000
This journal entry shows the addition in the capital balance of the partner.