On dissolution of a firm, partner's loan account is transferred to: Option 1: Bank Account Option 2: Realisation Account Option 3: Partner's Capital Account Option 4: Partner's Current Account

Answer: Bank Account. Solution: On dissolution of a partnership firm, Partner's Loan Account is transferred to Bank Account. Partner's loan represents money that the partner has lent to the firm, making it a liability of the firm. At the time of dissolution, this liability must be paid back to the partner in cash. The journal entry recorded is:, Particulars, Debit (₹), Credit (₹), Partner's Loan A/c, xxx, To Bank A/c, xxx, (Being partner's loan paid on dissolution), Partner's loan is not transferred to Realisation Account because: - Realisation Account records only those assets and liabilities that need to be realized or settled at values different from book values - Partner's loan is paid at book value directly through bank, so it bypasses the Realisation Account It is also not transferred to Partner's Capital Account because these are two distinct accounts with different legal standings. Partner's loan ranks higher in the order of payment than capital - loans must be paid before distributing any remaining amount to capital accounts. According to Section 48 of the Indian Partnership Act, 1932, the order of application of firm's property is: 1. Payment of firm's debts to third parties 2. Payment of loans/advances by partners 3. Payment of capital to partners 4. Distribution of surplus (if any)

Partnership

Dissolution

Easy

common

On dissolution of a firm, partner's loan account is transferred to:

Bank Account

Realisation Account

Partner's Capital Account

Partner's Current Account

✅ Correct Option: 1

On dissolution of a partnership firm, Partner's Loan Account is transferred to Bank Account.

Partner's loan represents money that the partner has lent to the firm, making it a liability of the firm. At the time of dissolution, this liability must be paid back to the partner in cash.

The journal entry recorded is:

Particulars	Debit (₹)	Credit (₹)
Partner's Loan A/c	xxx
To Bank A/c		xxx
(Being partner's loan paid on dissolution)

Partner's loan is not transferred to Realisation Account because:

Realisation Account records only those assets and liabilities that need to be realized or settled at values different from book values
Partner's loan is paid at book value directly through bank, so it bypasses the Realisation Account

It is also not transferred to Partner's Capital Account because these are two distinct accounts with different legal standings. Partner's loan ranks higher in the order of payment than capital - loans must be paid before distributing any remaining amount to capital accounts.

According to Section 48 of the Indian Partnership Act, 1932, the order of application of firm's property is:

Payment of firm's debts to third parties
Payment of loans/advances by partners
Payment of capital to partners
Distribution of surplus (if any)

2022: 30 Aug Shift 2

The treatment of Goodwill appearing in the balance sheet will be:

2026: 19 May Shift 1

Choose the correct statement/ statements related to the dissolution of the firm from the following.

(A) Accumulated profits and reserves are transferred to realisation account.

(B) On dissolution of the firm, the partner's capital accounts are closed through realisation account.

(C) After transferring liabilities like creditors and bills payables to the realisation account, in the absence of any information regarding their payment, such liabilities are treated as never paid

(D) Partner's loan account is not transferred to realisation account.

Choose the correct answer from the options given below:

2025: 13 May Shift 1

On the dissolution of a firm, creditor's are transferred to:

2025: 27 May Shift 2

On the happening of certain contingencies, Subject to contract between the partners, a firm is dissolved ,

(A) if constituted for a fixed term, by the expiry of that term.

(B) If constituted to carry out one or more ventures, by the completion thereof.

(C)by the death of a partner

(D) by the adjudication of a partner as an insolvent

Choose the correct answer from the options given below:

2025: 22 May Shift 2

If the asset is taken over by the creditor in lieu of the amount due to him, then the journal entry will be:

2026: 21 May Shift 2

At the time of the Dissolution of the Partnership firm, "Creditors were Rs.1,00,000. They accepted buildings valued at Rs.1,20,000 and paid cash to the firm Rs.30,000". Necessary journal entry would be :

On dissolution of a firm, partner's loan account is transferred to:

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