Partnership

Dissolution

Medium

common

When realisation expenses are paid by the firm on behalf of a partner, which among the following will be debited:

Realisation Account

Partner's Capital Account

Partner's Loan Account

Expense Account

✅ Correct Option: 2

When realisation expenses are to be borne by a partner (as per agreement), but the firm pays these expenses on behalf of that partner, the amount paid becomes recoverable from that partner.

The journal entry will be:

Particulars	Debit	Credit
Partner's Capital A/c	xxx
$\quad$ To Bank/Cash A/c		xxx
(Realisation expenses paid by firm on behalf of partner)

Why Partner's Capital Account is debited:

Since the partner was supposed to bear the expenses but the firm paid them, this payment creates a liability for the partner towards the firm. To recover this amount, the partner's capital is reduced by debiting the Partner's Capital Account.

Why Realisation Account is NOT debited:

Realisation Account is debited only when realisation expenses are borne by the firm. In this case, the firm is merely paying on behalf of the partner, so it's the partner who ultimately bears the expense, not the firm.

The amount paid reduces the partner's capital balance, ensuring proper settlement during the dissolution process.

2026: 24 May Shift 1

"Adjudication of a partner as an insolvent" leads to ________.

2025: 29 May Shift 2

Match List-I with List-II

List-I	List-II
(A). Compulsory Dissolution	(I). Partner becomes insane.
(B). Dissolution by notice	(II). Death of a partner.
(C). Dissolution by Court	(III). Business become illegal.
(D). Dissolution on certain contingencies	(IV). Partnership at will.

Choose the correct answer from the options given below:

2026: 13 May Shift 2

Select the correct statements from the following:

(A) Realisation Account is prepared at the time of death of a partner.

(B) Revaluation Account is prepared at the time of dissolution of a firm.

(D) At the time of dissolution, the Realised value of Assets are transferred to the Credit Side of the Realisation Account.

Choose a pair of correct statements from the given options below:

2025: 29 May Shift 2

Stock at the time of dissolution was appearing in books at Rs 50,000. Half of the stock was sold at a discount of 20% and the remaining was taken over by one of the partners at a 10% discount. What amount was received in cash at the time of realization of stock.

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:

2023: 20 June Shift 2

Select out of the following that is not considered as one of the modes of reconstitution of a partnership firm.

When realisation expenses are paid by the firm on behalf of a partner, which among the following will be debited:

Solution

Related questions:

Keyboard Shortcuts

CUET Accountancy Past Year Questions (Topic-Wise)