On dissolution, which item will be recorded on debit side and not credit side of partners' capital accounts?

Correct answer: Realisation loss

The direct answer is A: Realisation loss is debited to the partners’ capital accounts. On dissolution, the Realisation Account records the sale of assets and payment of liabilities. Its profit increases partners’ capital, so realisation profit is credited in their agreed profit-sharing ratio. Its loss decreases their capital, so realisation loss is debited. A is correct because a loss is a reduction. B, general reserve, is an accumulated gain already belonging to the partners; it is distributed by crediting their capital accounts. C, realisation profit, increases capital and is credited, not debited. D, interest on capital payable, is an amount due to partners and therefore increases their capital or current accounts, so it is credited. The useful rule is: items that increase a partner’s claim are credited, and items that reduce it are debited. Memory cue: loss means less capital, therefore debit.