passwella.
Menu

JAMB Principles of Accounts 2007 Question 8

Question 8

Partnership Admission, Retirement and Dissolution

Expenses paid during the conversion of a partnership to a company are

  1. A.debited to the partners' capital account
  2. B.debited to the realization account
  3. C.debited to the cash account.
  4. D.credited to the realization account.
Show the answer and explanation

Answer: B (debited to the realization account)

Explanation

Expenses of realisation reduce the gain on conversion, so they are debited to the realisation account and credited to cash.