When remaining partners can’t pay the entire amount immediately to outgoing partner, money in his capital account is transferred to his account.

assets

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expenses

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loan

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capital

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Solution

The correct option is C loan
When the entire amount is not paid immediately to outgoing partner, remaining money in his capital account is transferred to his loan account. The partners treat the amount due to the retiring partner as a loan from the partner so that they don’t have to arrange the finance immediately from outside.

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Similar questions

Amount due to a deceased partner shown by his capital account is transferred to his ___

After the death of a partner, the balance in his capital account is transferred to executor's account. True or False.

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