Question : Assertion (A): A loan from a relative of a partner is an external liability.

Reason (R): It is not transferred to the Realisation Account.
Option 1: Assertion (A) and Reason (R) are correct but the reason (R) is not the correct explanation of Assertion (A)
Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
Option 3: Assertion (A) is correct but the Reason (R) is not correct.
Option 4: Both Assertion (A) and Reason (R) are not correct.

Question

Question : Assertion (A): A loan from a relative of a partner is an external liability.

Reason (R): It is not transferred to the Realisation Account.

Option 1: Assertion (A) and Reason (R) are correct but the reason (R) is not the correct explanation of Assertion (A)

Option 2: Both, Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

Option 3: Assertion (A) is correct but the Reason (R) is not correct.

Option 4: Both Assertion (A) and Reason (R) are not correct.

Team Careers360 · Accepted Answer

Correct Answer: Assertion (A) is correct but the Reason (R) is not correct.

Solution : Partner's wife loan is credited to Realization a/c and paid as part of outside responsibility. Since Partner's Loan Account is not an external debt, it is not transferred to Realization Account. A new loan is opened for a different partner. Partner's loan is only repaid if there is any surplus after paying off external obligations.

Hence the correct answer is option 3.

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Question : Assertion (A): The partner’s Private Property can be applied to pay the firm’s debt.

Reason (R): In a partnership firm, partners have unlimited liability.

Question : Assertion (A): Balance at Banks is transferred to Realisation Account.

Reason (R): Balance at Bank is not to be realised but instead distributed in its present form.

Question : Assertion (A): Dissolution of the firm means the dissolution of the partnership between all the partners of the firm.

Reason (R): Dissolution of the firm means the closure of business and therefore means dissolution of

Question : Assertion (A) Currency held by the public is a monetary liability of the central bank.

Reason (R) Central bank controls credit, whereas commercial banks create credit with the currency held by the public.