Identify the situation when no entry is required in case of dissolution of a partnership firm.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- When a creditor accepts a fixed asset in payment of his/her dues.
No entry is required in case of dissolution of a partnership firm when a creditor accepts a fixed asset in payment of his/her dues. This is because the transaction does not involve any change in the cash or bank balance of the firm. The firm is simply transferring ownership of a fixed asset to the creditor in order to settle its debt.