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
Answer (1)
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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