At the time of dissolution of a partnership firm, a liability of ₹4,400 that had not been recorded in the books earlier was paid. What type of liability is this called?

Correct answer: Previously unrecorded liability

A liability that was not recorded in the firm’s books before dissolution is called a previously unrecorded liability. When it is paid, the Realisation Account is debited and the Bank/Cash Account is credited. Therefore, option A is correct. In the examination, remember that such items are recorded in the Realisation Account at the time of dissolution.