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Home Questions BK98W7P3DA
Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

Match the following journal entries passed at the time of preparing Realisation A/c.

LIST 1 LIST 2
A) When realisation expenses are incurred
and paid by the firm		 I) Realisation A/c Dr.
           To Partner’s Capital A/c
B) When realisation expenses are paid by
a partner on behalf of the firm		 II) No entry is required 
C) When a partner has agreed to bear the realisation expenses
and payment of realisation expenses is made by the firm		 III) Realisation A/c Dr.
         To Bank A/c 
D) When a partner has agreed to bear the realisation  expense
and partner himself pays the realisation expenses		 IV) Partner’s Capital A/c Dr.
             To Bank A/c

Choose the correct answer from the options given below.

Options:

A-III, B-II, C-IV, D-I

A-III, B-I, C-IV, D-II

A-II, B-I, C-IV, D-III

A-I, B-II, C-IV, D-III

Correct Answer:

A-III, B-I, C-IV, D-II

Explanation:

The correct answer is option 2- A-III, B-I, C-IV, D-II.

LIST 1 LIST 2
A) When realisation expenses are incurred
 and paid by the firm		 III) Realisation A/c Dr.
         To Bank A/c
B) When realisation expenses are paid by
a partner on behalf of the firm		 I) Realisation A/c Dr.
           To Partner’s Capital A/c
C) When a partner has agreed to bear the realisation expenses
and payment of realisation expenses is made by the firm		 IV) Partner’s Capital A/c Dr.
             To Bank A/c
D) When a partner has agreed to bear the realisation expense
and partner himself pays the realisation expenses		 II) No entry is required

 

For payment of realisation expenses, the following journal entries are made-

(1) When some expenses are incurred and paid by the firm in the process of realisation of assets and payment of liabilities: Realisation A/c Dr. To Bank A/c

(2) When realisation expenses are paid by a partner on behalf of the firm: Realisation A/c Dr. To Partner’s Capital A/c

(3) When a partner has agreed to bear the realisation expenses:

  • (i) if payment of realisation expenses is made by the firm Partner’s Capital A/c Dr. To Bank A/c
  • (ii) if the partner himself pays the realisation expenses, no entry is required

Note: In the absence of information about who is paying the expenses, it is implied that expenses are paid by the partner who has agreed to bear expenses.

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