All the firm of dissolution of partnership firm,why is the payament of partner's loan not done through capital account? Give reason
Answers
Answer:
Explanation:
We do not transfer the loan by a partner to firm to Realisation account, it remains in its account itself. At the time of settlement, i.e., payment of liabilities, we pay partner's loan after paying the outside liabilities but before payment of capital.
Answer:
Let us learn about the accounting treatment in case of a dissolution of the partnership firm. There is a special account to be made known as the realisation account, along with the necessary changes to the capital accounts. Let us study this.
Objectives of Business
Levels of Management
Accounting Treatment
On dissolution, the books of the firm are to be closed. Dissolution process starts by opening the following accounts in the firm’s books:
Realisation Account,
Partner’s Loan Account,
Partners’ Capital Accounts,
Bank or Cash Account.