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Home Questions A7NQHZMW5B
Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

At the time of dissolution of partnership firm, information of the firm disclosed a footnote about the contingent liability of ₹6,500. What will be the journal entry for recording this?

Options:

Realisation A/c Dr ₹6,500
    To Bank A/c                ₹6,500
(Contingent liability paid)

Realisation A/c Dr ₹6,500
    To Cash A/c                 â‚¹6,500
(Contingent liability paid)

No entry passed

Realisation A/c Dr.             â‚¹6,500
   To Partner’s Capital A/c             â‚¹6,500
(Contingent liability paid)

Correct Answer:

No entry passed

Explanation:

The correct answer is option 3- No entry passed.

Contingent liability has no balance. They are just showed as a footnote. There will be no treatment of contingent liability until they become liability for the firm. So, no entry is passed for this.

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