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Question

Write the word / term / phrase, which can substitute each of the following statements.

Expenses incurred on dissolution of a firm.

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Solution

Dissolution/Realisation Expenses

Explanation: Dissolution/Realisation Expenses are the expenses incurred on dissolution of a firm. These expenses belong to the firm and hence, they should be paid by the firm. However, sometimes these expenses are paid by the firm on behalf of a partner. In such cases, the Concerned Partner’s Capital Account is debited.

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