Question : Unrecorded liabilities, when paid on the dissolution of a firm, are credited to
Option 1: partner's capital account
Option 2: liabilities account
Option 3: cash account
Option 4: Realization account
Correct Answer: cash account
Solution :
Answer =
cash account.
In case of unrecorded liabilities, either the same will be paid off or will be taken over by any partner. The accounting treatment in both cases will be as follows:-
Realisation a/c Dr
To cash account/partner's capital account
Hence, the correct option is 3.