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What is the settlement of a firm's liability called?

Answer and explanation

Correct answer: Payment

A liability is settled when the firm pays the amount due to its creditors or other parties. Therefore, ‘Payment’ is correct. A receipt means money received, while profit and loss are accounting results. Exam tip: settling a liability means making a payment.

Related tags

AccountancyPartnership DissolutionRealisation AccountLiability SettlementAccounting BasicsDissolution Of A Partnership FirmClass 12 Mcq

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