Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Dissolution of Partnership Firm

Question:

On firm's dissolution, a partner undertook firm's creditors at ₹17,000. In this case the account will be credited:

Options:

Realisation Account

Cash account

Partner's Capital Account

Profit & Loss Account

Correct Answer:

Partner's Capital Account

Explanation:

The correct answer is option 3- Partner's Capital Account.

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

As partner capital account increased by this amount because he will pay liability. So, partners capital account is credited with the amount of liability.