Question

When liability is discharged by a partner at the time of dissolution his capital account is credited because?

Answer 1

Answer:

Answer:Realisation Account: This account is prepared at the time of dissolution of a firm to know the profit/loss at the time of dissolution of the firm. All the assets except cash/bank are transferred to the debit side of realisation account.Dissolution of Partnership Firm and Settlement of Accounts. Dissolution of partnership firm is a process in which relationship between partners of firm is dissolved or terminated. ... This process includes the discarding and disposing of all the assets of firm or and settlements of accounts, assets, and liabilities.

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Answer 2

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Dear Student, 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