When realisation expenses are paid by the firm on behalf of a partner, which account will be debited?
- ARealisation Account
- BPartner's Capital Account
- CPartner's Loan Account
- DRevaluation Account
Solution & Step-by-step Explanation
If realization expenses are supposed to be borne personally by a specific partner but are paid out using the firm's cash for temporary convenience, it means the firm is recovering this amount from that partner. Consequently, the firm will debit the respective Partner's Capital Account and credit Cash/Bank Account.The journal entry is: