On dissolution of a firm, the amount of loan taken from partner by fi…

The correct answer is option 1- Bank A/c

Note: The given answer is as per NTA. However, there seems to be a mistake/ambiguity in the question. Partner's loan is not transferred to realisation account but a separate account named partner's loan account is made and this loan is paid separately because it is not outsider liability. On dissolution, the journal entry for loan taken from a partner is as follows

Journal entry for this-
Partner's loan A/c  Dr.
         To Bank A/c

Thus, two accounts are involved:

• Partner’s Loan A/c (Option 4) – which records the liability
• Bank A/c (Option 1) – through which the payment is actually made

Since the question uses the phrase “transferred/settled” and NTA might have considered the final settlement, the answer is taken as Bank A/c.