Unrecorded liabilities when paid are shown in: Option 1: Debit of Realisation Account Option 2: Debit of Bank Account Option 3: Credit of Realisation Account Option 4: Not shown anywhere

Answer: Debit of Realisation Account. Solution: When unrecorded liabilities are paid during the dissolution of a partnership firm, they need to be recorded in the books. Unrecorded liabilities are those obligations of the firm that existed but were never recorded in the books before dissolution. When these are actually paid, the payment represents an outflow related to settling the firm's obligations. The journal entry for payment of unrecorded liabilities is: Realisation Account Dr. To Bank Account The Realisation Account is debited because: - Realisation Account records all assets (except cash/bank) and all external liabilities during dissolution - Payment of any liability is treated as an expense or loss for the realisation process - Just like recorded liabilities are transferred to the debit of Realisation Account, unrecorded liabilities when paid are also debited to this account The Bank Account is credited as cash goes out of the business. It's important to note that if the unrecorded liability is discovered but not yet paid, it would first be recorded as: Realisation Account Dr. To Unrecorded Liability Account And later when paid: Unrecorded Liability Account Dr. To Bank Account However, when paid directly without prior recording, the single entry debits Realisation Account. Correct Option: 1 (Debit of Realisation Account)

Partnership

Dissolution

Medium

Unrecorded liabilities when paid are shown in:

Debit of Realisation Account

Debit of Bank Account

Credit of Realisation Account

Not shown anywhere

✅ Correct Option: 1

When unrecorded liabilities are paid during the dissolution of a partnership firm, they need to be recorded in the books.

Unrecorded liabilities are those obligations of the firm that existed but were never recorded in the books before dissolution. When these are actually paid, the payment represents an outflow related to settling the firm's obligations.

The journal entry for payment of unrecorded liabilities is:

Realisation Account Dr.

To Bank Account

The Realisation Account is debited because:

Realisation Account records all assets (except cash/bank) and all external liabilities during dissolution
Payment of any liability is treated as an expense or loss for the realisation process
Just like recorded liabilities are transferred to the debit of Realisation Account, unrecorded liabilities when paid are also debited to this account

The Bank Account is credited as cash goes out of the business.

It's important to note that if the unrecorded liability is discovered but not yet paid, it would first be recorded as:

Realisation Account Dr.

To Unrecorded Liability Account

And later when paid:

Unrecorded Liability Account Dr.

To Bank Account

However, when paid directly without prior recording, the single entry debits Realisation Account.

Correct Option: 1 (Debit of Realisation Account)

2026: 29 May Shift 1

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

(A) When a partner becomes insane.

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

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

Choose the correct answer from the options given below:

2025: 2 June Shift 2

An unrecorded asset is taken over by a creditor in full settlement in such a case

2026: 24 May Shift 1

In case of dissolution, application of assets of the firm shall be applied in a particular manner and order.

Arrange the following steps in a sequence:

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

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

(D) 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

Choose the correct answer from the options given below:

2022: 30 Aug Shift 2

The accumulated profits and reserve are transferred to:

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:

2026: 11 May Shift 1

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

Unrecorded liabilities when paid are shown in:

Solution

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