A liability that is not shown in the Balance Sheet on the date of dissolution cannot be repaid.

Question

State whether the following statements are True or False with reasons.

A liability that is not shown in the Balance Sheet on the date of dissolution cannot be repaid.

Answer 1

This statement is False.

Liability of the firm which is not yet recorded in the book of accounts is called unrecorded liability. At the time of dissolution unrecorded liability is supposed to be paid though it is not shown in the Balance Sheet.