Practicing Success
If liability is assumed by a partner at the time of dissolution of partnership firm then Partner’s Capital Account is: |
Debited Credited No treatment in partner capital account None of these |
Credited |
The correct answer is option 2- credited. For a liability that a partner takes responsibility to discharge, the following journal entry is passed: As partner has taken responsibility to discharge liability, his capital account balance is increased as firm has to pay amount to partner later. That's why his account is credited. |