Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

On dissolution of a firm, a partner paid Rs.1,000 for the firm's realisation expenses on behalf of the firm. Which account will be debited  on passing journal entry regarding this?

Options:

Realisation Account

Cash account

Partner's Capital Account

Profit & Loss Account

Correct Answer:

Realisation Account

Explanation:

The correct answer is option 1- Realisation Account.

When realisation expenses are paid by a partner on behalf of the firm:
Realisation A/c Dr.       1,000
   To Partner’s Capital A/c    1,000
(Expenses paid by the partner)

So, realisation account is debited if on the dissolution of a firm, a partner paid Rs.1,000 for firm's realisation expenses on behalf of the firm.