In case of dissolution of a firm, the partner's loan A/c is transferred to ________
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Bank A/c
A partner’s loan is a claim of the partner on the firm, separate from his capital. On dissolution it is paid off in cash, after the outside liabilities and before the partners’ capitals, so the Partner’s Loan A/c is closed by transferring it to the Bank A/c.
Only assets (other than cash, bank and fictitious assets) and outside liabilities go to the Realisation A/c, and a partner’s loan is neither. It is not merged in the Partner’s Capital A/c either, because a loan is repaid ahead of capital. The Revaluation A/c belongs to admission, retirement and death, when the firm carries on; it is not used on dissolution.
NCERT (2026-27 edition):
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