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If a partner pays dissolution expenses on behalf of the firm, to whom will the firm reimburse the amount?

Answer and explanation

Correct answer: The same partner

When a partner pays dissolution expenses on behalf of the firm, the amount becomes payable by the firm, so the same partner is reimbursed. Generally, the Realisation Account is debited and the concerned partner’s Capital Account is credited. However, if the partner has agreed to bear the expenses personally, no reimbursement is made. In the examination, distinguish between ‘paid on behalf of the firm’ and ‘undertaken to bear personally’.

Related tags

Dissolution Of PartnershipRealisation AccountDissolution ExpensesPartner Capital AccountClosing BusinessClosing The BusinessDissolution Of A Partnership FirmAccountancy

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