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Home Questions KE726C3UEH
Target Exam

CUET

Subject

Accountancy

Chapter

Dissolution of Partnership Firm

Question:

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.

Options:

Assertion (A) and Reason (R) are correct but the reason (R) is not the correct explanation of Assertion (A).

Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Assertion (A) is correct but the Reason (R) is not correct.

Both Assertion (A) and Reason (R) are not correct.

Correct Answer:

Assertion (A) is correct but the Reason (R) is not correct.

Explanation:

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.

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