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On dissolution of a partnership firm, if a partner pays realisation expenses of ₹4,000 from personal funds and the firm is to bear the expense, how much reimbursement will the partner receive from the firm?

Answer and explanation

Correct answer: Reimbursement of ₹4,000

When a partner pays realisation expenses on behalf of the firm and the firm bears the expense, the actual amount paid is credited to the partner’s capital account. Therefore, the partner will receive reimbursement of ₹4,000. There is no basis for doubling or halving this amount. Exam tip: Expenses paid personally by a partner for the firm are reimbursed at the actual amount paid, provided the firm bears them.

Related tags

Partnership DissolutionRealisation ExpensesPartner ReimbursementCapital AccountClosing BusinessClosing The BusinessDissolution Of A Partnership FirmAccountancy

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