When an installment of a retiring or deceased partner’s loan is paid through the bank, which entry will be made in the Bank Account?

Correct answer: Bank Account will be credited

When the loan installment is paid through the bank, the bank balance decreases. Since the Bank Account is an asset account, a decrease in an asset is recorded on the credit side; therefore, the Bank Account is credited. Option B is incorrect because debiting the Bank Account indicates an increase in the bank balance. Exam tip: Increase in an asset is debited, while decrease in an asset is credited.