Where will the retiring partner's loan account be shown in the partnership accounts?
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Liabilities side of B/S.
The balance of the retiring partner’s loan account is shown on the liabilities side of the Balance Sheet till the last installment is paid to him/her.
When a partner retires and the firm is not able to immediately pay their due amount, the amount payable is transferred to the Retiring Partner’s Loan Account. This amount becomes a liability for the firm until it is paid off.