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

The correct answer is Option (1) → Bank Account

On dissolution, a loan given by a partner to the firm is not transferred to the Realisation Account. It is repaid out of the money realised, after outside creditors and before the partners’ capitals (Section 48). The entry is Partner’s Loan A/c Dr., To Bank A/c, so the loan account is closed against the Bank Account.

In the book’s version of this question the options are Realisation, Capital and Current Account, and the answer is (d) None of the above: the loan account is not transferred to any of these accounts but paid off. NTA replaced that option with Bank Account, the account the payment goes through.

Option (2) Realisation Account — Incorrect. Only external liabilities are transferred to the Realisation Account; a partner’s loan is settled separately.

Option (3) Partner's Current Account — Incorrect. The loan is a separate debt of the firm and is paid in cash, not merged with the current account.

Option (4) Loan from Partner Account — Incorrect. That is the very account being closed; it cannot be transferred to itself.