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Home Questions 4HYRPJ7BX4
Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

Identify the journal entry to be passed in case of dissolution of a partnership firm, when a partner discharge the liability of the firm.

Options:

Partner's capital A/c Dr.
       To Realisation A/c

Realisation A/c Dr.
    To Partner's Capital A/c

Realisation A/c Dr.
   To Bank A/c

Entry cannot be recorded

Correct Answer:

Realisation A/c Dr.
    To Partner's Capital A/c

Explanation:

The correct answer is Option 2 - 
Realisation A/c Dr.
        To Partner's Capital A/c.

This entry reflects that the partner is settling the liabilities of the firm, and the Realisation Account is debited to recognize the reduction in the firm's liabilities. Simultaneously, the Partner's Capital Account is credited to indicate the partner's share is increased to such amount.

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