Unrecorded liabilities, when paid by the partnership firm at the time of dissolution of the firm are shown in which account?
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Debit side of Realisation A/c.
* For payment of liabilities, the following journal entry is passed-
Realisation A/c Dr.
To Bank A/c
As the liability is a loss for the firm so realisation account is debited and its payment will reduce the bank balance so bank account is credited.