At the time of dissolution of a Firm, the Loan from a Partner Account should be
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Paid out separately
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A loan from a partner is treated as a liability of the firm, but it is not transferred to the Realisation Account.
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At the time of dissolution, loans from partners are paid after settling all external liabilities but before returning capital to partners.
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Hence, the correct accounting treatment is that the loan from a partner is paid out separately.