When realisation expenses are paid by the Partner on behalf of a Firm, which account will be credited:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Partner's Capital Account
Realisation expenses are an expense of the firm, so Realisation Account is debited. When a partner pays them from his own pocket on behalf of the firm, the firm now owes that amount to the partner, so his capital account is credited.
Option (1) Realisation Account — Incorrect. Realisation Account is the account debited with the expenses, not credited.
Option (3) Partner's Loan Account — Incorrect. The payment is settled through the partner’s capital account on dissolution; it is not a loan given to the firm.
Option (4) Bank Account — Incorrect. The firm’s bank is credited only when the firm itself pays the expenses.
NCERT (2026-27 edition):
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