Match List-I with List-II
| List-I | List-II | ||
|---|---|---|---|
| (A) | Realisation expenses are incurred and paid by the firm | (I) | No Entry |
| (B) | Realisation expenses are paid by a partner on behalf of the firm | (II) | Realisation A/c Dr. To Bank A/c |
| (C) | Partner himself pays the realisation expenses | (III) | Partner's Capital A/c Dr. To Bank A/c |
| (D) | Partner has agreed to bear the realisation expenses but expenses are paid by the firm | (IV) | Realisation A/c Dr. To Partner's Capital A/c |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A) - (II), (B) - (IV), (C) - (I), (D) - (III)
The entry for realisation expenses depends on two things: who pays the expenses, and who has agreed to bear them. An expense the firm bears goes to the debit of Realisation Account; an expense a partner has agreed to bear is his own and never touches Realisation Account.
(A) Realisation expenses are incurred and paid by the firm — this matches (II) Realisation A/c Dr. / To Bank A/c. The firm pays out of its own bank balance, and the expense reduces the gain on realisation, so Realisation Account is debited and Bank is credited.
(B) Realisation expenses are paid by a partner on behalf of the firm — this matches (IV) Realisation A/c Dr. / To Partner's Capital A/c. The expense is still the firm's, so Realisation Account is debited. The partner has paid it from his own pocket, so the firm now owes him that amount and his Capital Account is credited.
(C) Partner himself pays the realisation expenses — this matches (I) No Entry. Here the partner who has agreed to bear the expenses also pays them himself. No money of the firm moves and the firm owes him nothing, so nothing is recorded in the firm's books.
(D) Partner has agreed to bear the realisation expenses but expenses are paid by the firm — this matches (III) Partner's Capital A/c Dr. / To Bank A/c. The firm has paid an expense that was the partner's burden, so the amount is charged to his Capital Account and Bank is credited.
NCERT (2026-27 edition):
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