When realisation expenses are paid by the firm on behalf of a partner, such expenses are debited to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Partner's Capital Account
Realisation expenses that a partner has agreed to bear are his own cost, not the firm's. When the firm pays them on behalf of that partner, the firm's cash goes out for him, so the amount is debited to that partner's capital account and credited to Bank. The firm's own result on realisation is not affected.
Why the other options are incorrect
Option (1) Realisation Account — Incorrect. Realisation Account is debited only with expenses the firm itself bears. Debiting it here would reduce every partner's profit on realisation for a cost that one partner has taken on.
Option (3) Partner's Loan Account — Incorrect. A partner's loan account records money the partner has lent to the firm. An expense paid for the partner is not a change in his loan; it is charged to his capital account.
Option (4) Bank Account — Incorrect. Bank Account is the account credited here, because cash goes out of the firm. It cannot also be the account debited.
NCERT (2026-27 edition):
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