There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.
Assertion (A): A loan from a relative of a partner is an external liability at the time of dissolution of the partnership firm.
Reason (R): It is not transferred to the Realisation Account.
Answer & explanation
Correct answer: option 3
All external liability accounts including provisions, if any, are closed by transferring them to the credit of the Realisation account and a loan from a relative of a partner is different from a partner's loan & is an outsider liability.