Question

How is partners' current account treated or recorded in the dissolution of a partnership firm? Explain.

Answer 1

Partner's current account is not carried in the realisation account because it is an insider liability.

Realisation account only records outside liabilities .

When we prepare partners current account at the time of dissolution to make adjustments. If there is a debit balance after making adjustments then it is carried down on the credit side of the Bank Account . If the balance in the current account is a credit balance then it is carried down on the debit side of the bank account. This is paid off at last.