Unrecorded liability, when paid on dissolution of a firm is debited to..............
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Realisation A/c.
For settlement of any unrecorded liability:
Realisation A/c Dr.
To Bank A/c
(Liability is paid off)
Realisation account is debited as it is a liability which has to be paid by the firm.
Bank account is credited as settlement of liability reduces the bank balance of the firm.