On dissolution of a firm, partner's spouse loan account is transferred to:
Answer & explanation
Correct answer: option 1
Correct answer: Option (1) → Realisation Account
Concept: On dissolution, third-party (external) liabilities are transferred to the Realisation Account for settlement – per Dissolution of Partnership Firm.
A loan from a partner’s spouse is a loan from an outsider (a third party), not from a partner. Like creditors and other external liabilities, it is transferred to the Realisation Account (unlike a partner’s own loan, which is settled through a separate Partner’s Loan Account). Hence the Realisation Account.