When realisation expenses are paid by the firm on behalf of a partner, such expenses are debited to:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Partner’s Capital Account
Expenses paid by the firm on behalf of a partner are his own expenses, not the firm’s, so they are charged to him: Partner’s Capital A/c Dr. To Bank A/c. Only realisation expenses borne by the firm itself are debited to the Realisation Account.
NCERT (2026-27 edition):
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