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Question : When unrecorded liability is paid, ------------------is debited and ----------------Account is credited with the amount paid, it being in the nature of-------------------.

Option 1: liability, cash, profit

Option 2: Realization, cash, loss

Option 3: Realization, partner's capital account, loss

Option 4: None of the above


Team Careers360 18th Jan, 2024
Answer (1)
Team Careers360 23rd Jan, 2024

Correct Answer: Realization, cash, loss


Solution : Answer Realization, cash, loss.

When recorded and unrecorded liabilities are paid by the firm, then the realization account will be debited, and the cash or bank account will be credited with the same amount. It is the nature of loss.
Hence, the correct option is 2.

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