On which side is the initial amount due recorded in retiring partner loan account?

Correct answer: Credit side

The direct answer is A, the credit side. When a partner retires, the amount finally due to that partner becomes a liability of the firm. In a liability account, an amount owed is recorded on the credit side. Therefore the initial amount due is credited to the retiring partner’s loan account. Later, when the firm pays the amount, the loan account is debited because the liability is reduced or settled. Option A is correct. B is wrong because the debit side is used for payment or reduction of the liability, not for first recording the amount due. C is wrong because the initial amount is recorded once, not on both sides. D is wrong because it must be recorded to show the firm’s obligation. Memory cue: liability created is credited; liability paid is debited.