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: When a firm is dissolved, a partner's loan account represents a liability that the firm owes to the partner. This liability needs to be paid off in cash. The journal entry for payment of partner's loan is: Partner's Loan Account Dr. To Bank Account The partner's loan is paid directly through the bank account and is not transferred to the Realisation Account. This is because: - Realisation Account is used only for realizing assets and settling external liabilities - Partner's loan is an internal liability and has a specific order of payment during dissolution - It is paid after external liabilities but before settling capital accounts Order of Payment during Dissolution: External Liabilities → Partner's Loans → Partner's Capital Accounts Since the partner's loan is settled by making an actual cash payment, it is transferred to (paid through) the Bank Account.

Partnership

Dissolution

Easy

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

When a firm is dissolved, a partner's loan account represents a liability that the firm owes to the partner. This liability needs to be paid off in cash.

The journal entry for payment of partner's loan is:

Partner's Loan Account Dr.

To Bank Account

The partner's loan is paid directly through the bank account and is not transferred to the Realisation Account. This is because:

Realisation Account is used only for realizing assets and settling external liabilities
Partner's loan is an internal liability and has a specific order of payment during dissolution
It is paid after external liabilities but before settling capital accounts

Order of Payment during Dissolution:

External Liabilities → Partner's Loans → Partner's Capital Accounts

Since the partner's loan is settled by making an actual cash payment, it is transferred to (paid through) the Bank Account.

2026: 29 May Shift 2

At the time of dissolution, creditors appear at Rs 50,000. Half of the creditors agreed to take unrecorded furniture of Rs 18,000 and Rs 5,000 in full settlement and the remaining creditors were paid 90%. The amount paid to the creditors that will be shown in the Realisation A/c is:

2025: 30 May Shift 1

When a firm is dissolved, Provision for Bad and Doubtful Debt Account :-

2026: 11 May Shift 1

At the suit of a partner, the court may order a partnership firm to be dissolved on the following grounds :

A. When a partner becomes insane.

B. When a partner becomes permanently incapable of performing his duties as a partner.

C. When a partner is guilty of misconduct which is likely to adversely affect the business of the firm.

D. When a partner persistently commits breach of partnership agreement.

Choose the correct answer from the options given below:

2026: 21 May Shift 1

On dissolution of a firm, Investment and Investment Fluctuation Fund appeared in the balance sheet. These will be transferred to:

2024

Existing Profit and Loss Account in the books of the firm will be shared/borne by partners in the ratio:

2025: 2 June Shift 2

Anubha looked after the dissolution work for remuneration of Rs. 8,500 and agreed to bear dissolution expenses upto Rs. 6,000. Actual expenses paid by her were Rs. 7,600. What will be the journal entry for remuneration payable to Anubha?

(A) Realisation A/c is debited by 8,500

(B) Anubha's Capital A/c is credited by 8,500.

(D) Anubha's Capital is credited by13,600.

Choose the correct answer from the options given below:

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

Solution

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