At the time of dissolution of a partnership firm, on which side of the Realisation Account is the payment of liabilities recorded?

Correct answer: Debit side

Payment of liabilities is recorded on the debit side of the Realisation Account because it is an expense incurred in settling the liabilities. The credit side records the transfer of liabilities, not their payment. Exam tip: In the Realisation Account, assets transferred and realisation expenses are generally debited, while liabilities transferred and proceeds from asset realisation are credited.