At the time of dissolution, when the partner is paid the final amount through the bank, what effect does this have on the bank account?

Correct answer: Bank account will be credited

Payment to a partner through the bank reduces the firm’s bank balance. A decrease in an asset is recorded on the credit side, so the entry is: Partner’s Capital Account Dr. To Bank Account. Option B is incorrect because debiting the bank account would increase the bank balance. Exam tip: Whenever cash or bank funds are paid out, the Cash or Bank Account is generally credited.