Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

If liability is assumed by a partner at the time of dissolution of partnership firm then Partner’s Capital Account is:

Options:

Debited

Credited

No treatment in partner capital account

None of these

Correct Answer:

Credited

Explanation:

The correct answer is option 2- credited.

For a liability that a partner takes responsibility to discharge, the following journal entry is passed:
Realisation A/c Dr.
   To Partner’s Capital A/c

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.