When realisation expenses are paid by the firm on behalf of a partner, which among the following will be debited?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Partner’s Capital Account
Realisation expenses that a partner should bear are his own cost. If the firm pays them for him, the firm is paying on his behalf, so the amount is charged to that partner’s capital account, not to the firm’s realisation account.
Partner’s Capital A/c Dr.
To Bank A/c
Why the other options are incorrect
Option (1) Realisation Account — Incorrect. The realisation account bears only the firm’s own realisation expenses.
Option (3) Partner’s Loan Account — Incorrect. The loan account records money the partner lent to the firm; this is a charge on the partner, settled through his capital.
Option (4) Expense Account — Incorrect. No separate expense account is opened on dissolution; the expense is not the firm’s at all.
NCERT (2026-27 edition):
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