In case of dissolution of partnership firm, any liability assumed/paid by a partner is shown on ........?

Debit of Realisation Account

The correct answer is Option (1) → Debit of Realisation Account

In the case of the dissolution of a partnership firm, all assets and external liabilities are first transferred to the Realisation Account. When a partner assumes or pays an external liability, the following happens:

1. The liability is settled, which is considered a loss or a reduction in the firm's obligations in the dissolution process. This reduction is recorded on the Debit side of the Realisation Account (which records expenses and losses on the realization process).

2. Since the payment is made by the partner (or the partner has agreed to assume it), the partner's capital account must be credited to reimburse them later.

Realisation A/c Dr. 

           To Partner’s Capital A/c Cr.