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JAMB Principles of Accounts 2008 Question 40

Question 40

Partnership Admission, Retirement and Dissolution

In partnership dissolution, an asset taken over by a partner is debited to

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

Answer: A (partners capital account and credited to realization account)

Explanation

The partner pays for the asset out of his capital, so his capital account is debited and the realisation account credited.