Question

Complete the following statement?
When a liability is discharged by a partner, at the time of dissolution, Capital Account is credited
because___________​

Answer 1

Answer : When a liability is discharged by a partner at the time of dissolution Capital Account is credited because liabilility of the form is decreasing and Partners Capital Account is credited as per the rule of Personal Account.

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Answer 2

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When any partner discharge the liability of the firm then Realisation A/c is debited because liability of the firm is decreasing ( as per the rule of Nominal Account i.e. 'Debit all the expenses and losses') and Partner's Capital Account is credited as per the rule of Personal Account.