When realization expenses are paid by the firm on behalf of a partner, such expenses are debited to: Option 1: Realisation Account Option 2: Partners capital account Option 3: Partners Loan account Option 4: Bank Account

Answer: Partners capital account. Solution: When Realization Expenses are Paid by Firm on Behalf of a Partner When realization expenses are paid by the firm on behalf of a partner, it means the partner was supposed to bear these expenses, but the firm has paid them instead. Treatment Since the firm has paid an amount that was the partner's responsibility: - The partner effectively owes this amount to the firm - This reduces the amount payable to the partner - Therefore, Partner's Capital Account is debited Journal Entry, Particulars, Debit, Credit, Partner's Capital A/c, Dr, ₹ XXX, To Bank A/c, ₹ XXX, (Being realization expenses paid on behalf of partner), Important Distinction Normal realization expenses (borne by the firm) → Debited to Realization Account Realization expenses paid on behalf of partner (borne by the partner) → Debited to Partner's Capital Account The key phrase "on behalf of" indicates that the partner is ultimately responsible for this expense, and the firm is merely making the payment temporarily. This amount will be recovered by reducing the partner's claim from the firm. Correct Answer: Option 2 - Partners Capital Account

Partnership

Dissolution

Medium

When realization expenses are paid by the firm on behalf of a partner, such expenses are debited to:

Realisation Account

Partners capital account

Partners Loan account

Bank Account

✅ Correct Option: 2

When Realization Expenses are Paid by Firm on Behalf of a Partner

When realization expenses are paid by the firm on behalf of a partner, it means the partner was supposed to bear these expenses, but the firm has paid them instead.

Treatment

Since the firm has paid an amount that was the partner's responsibility:

The partner effectively owes this amount to the firm
This reduces the amount payable to the partner
Therefore, Partner's Capital Account is debited

Journal Entry

Particulars	Debit	Credit
Partner's Capital A/c	Dr	₹ XXX
To Bank A/c
(Being realization expenses paid on behalf of partner)

Important Distinction

Normal realization expenses (borne by the firm) → Debited to Realization Account

Realization expenses paid on behalf of partner (borne by the partner) → Debited to Partner's Capital Account

The key phrase "on behalf of" indicates that the partner is ultimately responsible for this expense, and the firm is merely making the payment temporarily. This amount will be recovered by reducing the partner's claim from the firm.

Correct Answer: Option 2 - Partners Capital Account

2025: 16 May Shift 1

Realization profit of 55,980 to be distributed amongst partners is:

2025: 30 May Shift 2

Which account is debited for Realisation expenses paid?

2025: 30 May Shift 2

In case of the dissolution of a firm, the firm ceases to conduct business and has to settle its accounts. Arrange in the correct manner and order the assets of the firm, including any sum contributed by the partners to make up for deficiencies of capital:

(A) In paying to each partner proportionately what is due to him on account of capital

(B) In paying the debts of the firm to the third parties

(C) In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital (i.e. partner's loan)

(D) The residue, if any, shall be divided among the partners in their profit sharing ratio

Choose the correct answer from the options given below:

2025: 27 May Shift 1

In which of the following situation compulsory dissolution of partnership can be done?

2025: 13 May Shift 1

Which statements are true about the dissolution of a partnership-

(A) Dissolution of a partnership is different from dissolution of a firm.

(B) A partnership is dissolved when there is a death of a partner.

(D) Dissolution of partnership can not take place without intervention of the court.

Choose the correct answer from the options given below:

2026: 21 May Shift 1

Match List-I with List-II

List-I	List-II
(A) At the time of dissolution, unrecorded assets when taken over by a partner are shown in	(I) Debit of Realisation Account
(B) At the time of dissolution, unrecorded liabilities when paid are shown in	(II) Credit of Partners' capital Account
(C) At the time of admission of a partner, General Reserve will be shown in	(III) Debit of Partners' capital Account
(D) At the time of admission of a partner, Debit balance of Profit & Loss A/c will be shown in	(IV) Credit of Realisation Account

Choose the correct answer from the options given below:

When realization expenses are paid by the firm on behalf of a partner, such expenses are debited to:

Solution

When Realization Expenses are Paid by Firm on Behalf of a Partner

Treatment

Journal Entry

Important Distinction

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