Partner Accounts

The partner has paid a firm expense from personal funds, so the firm becomes liable to reimburse the partner. Therefore, the partner’s capital account is credited. Debiting the account would be incorrect because the partner has paid on behalf of the firm, not withdrawn money from it. Exam tip: An expense paid personally by a partner for the firm is generally credited to the partner’s capital or current account.

Expenses paid by firm go to realisation account. Their effect reaches capital accounts as profit or loss.

Remuneration is income of the partner, so it is credited to his capital account. Treat it separately from expense payment.

Both amounts are payable to the partner, so total credit is five thousand rupees. Add such small items carefully.

An unrecorded investment is an asset of the firm. When a partner takes it over, the agreed value of the asset is debited to the partner’s Capital Account and credited to the Realisation Account. Therefore, option A is correct. Option B is incorrect because the partner’s capital account is debited, not credited, when the partner takes over an asset. Exam tip: For an asset taken over by a partner, debit the Partner’s Capital Account.

When a partner takes over an unrecorded liability, he agrees to discharge that obligation on behalf of the firm. This benefits the firm, so the partner’s capital account is debited by the amount of the liability. Hence, ‘It will be debited’ is correct. Crediting the capital account is incorrect because it would increase the partner’s claim against the firm, whereas taking over the liability reduces that claim. Exam tip: the entry is Partner’s Capital A/c Dr. to Realisation A/c.

A's share is two-seventh, so four thousand rupees will be debited. Treat fictitious asset like loss.

The governing partnership principle is that, in the absence of an agreed profit-sharing ratio, partners share profits and losses equally, unless the partnership agreement or applicable law provides a specific different rule. Thus, if there are two partners, each receives one-half; with three partners, each receives one-third. Option A is correct. Capital ratio is not automatically used merely because capital contributions differ. Cash ratio has no standard role in distributing partnership profit, and age is irrelevant to the accounting entitlement. In an examination, the wording must be checked carefully: if a deed, agreement, or statutory condition specifies a ratio, that stated condition overrides the default equal-sharing rule.

The governing concept is equal distribution when no profit-sharing ratio has been specified. With three partners, the total realisation profit of ₹15,000 is divided into three equal parts. Calculation: ₹15,000 ÷ 3 = ₹5,000 per partner. Therefore, option A is correct, and the three individual shares together total ₹15,000. Option B is the entire profit rather than one partner's share. Option C would total only ₹9,000 for all three partners, leaving ₹6,000 undistributed, while option D would produce ₹30,000 in aggregate and exceed the available profit. The calculation assumes there are no special agreement terms or additional adjustments affecting distribution.

Deficiency of an insolvent partner arises from debit balance of his capital account. The rule tells who will bear it.

When amount is received from insolvent partner, his due amount reduces. Therefore it is credited to his capital account.

Out of ten thousand, four thousand is received, so deficiency is six thousand rupees. Only unpaid amount is deficiency.

The ratio of thirty thousand and twenty thousand is three is to two. Garner versus Murray uses capital ratio.

Under the Garner v. Murray rule, unless the partnership agreement provides otherwise, the insolvent partner’s capital deficiency is borne by the solvent partners in their capital ratio. Since their capital balances are equal, the capital ratio is equal and the deficiency is shared equally. Exam tip: determine the solvent partners’ capital ratio first, then allocate the deficiency in that ratio.

Only after finding result of realisation account, profit or loss is transferred to capital accounts. Complete realisation account first.

The governing concept is the allocation of realisation loss to partners' capital accounts. A loss is debited to the partner's capital account because it reduces the amount ultimately payable to that partner. Starting with a credit balance of ₹20,000 and allocating a loss of ₹5,000, the remaining credit is ₹20,000 − ₹5,000 = ₹15,000. Therefore, option A is correct. A credit of ₹25,000 would incorrectly add the loss, while a debit of ₹5,000 shows only the adjustment amount and ignores the opening credit balance. A debit of ₹20,000 also ignores the loss allocation process and reverses the account's original position.

The governing concept is the effect of realisation profit on a partner's capital account. Profit is credited to the partners in their agreed sharing ratio, so it increases the credit balance and the amount payable at settlement. Using the figures given, new balance = opening credit ₹18,000 + realisation profit ₹6,000 = credit ₹24,000. Hence option A is correct. A credit of ₹12,000 incorrectly subtracts the profit. A debit of ₹6,000 records the profit in the wrong direction and ignores the opening balance, while a debit of ₹18,000 reverses the original credit without accounting for the profit. The result assumes the stated ₹6,000 is this partner's allocated share of the realisation profit.

A credit balance in the partner’s capital account represents the amount payable to the partner. After paying the full ₹12,000, the balance becomes nil, so the capital account is closed. This payment does not create a loss in the Realisation Account; realisation profit or loss is determined from the realisation of assets and settlement of liabilities. Exam tip: When a credit capital balance is paid in full, the account becomes nil and is closed.

Out of five thousand, three thousand is received, so two thousand remains. It is still recoverable.

Payment to a partner through the bank reduces the firm’s bank balance. A decrease in an asset is recorded on the credit side, so the entry is: Partner’s Capital Account Dr. To Bank Account. Option B is incorrect because debiting the bank account would increase the bank balance. Exam tip: Whenever cash or bank funds are paid out, the Cash or Bank Account is generally credited.

When cash is received from a partner, the firm’s cash balance increases. An increase in an asset is recorded on the debit side, so the Cash Account is debited. The usual entry is ‘Cash Account Dr. To Partner’s Capital Account.’ Crediting the Cash Account would be incorrect because it represents a decrease in cash. Exam tip: Increase in an asset = debit.

The partner paid on behalf of the firm, so the firm owes him. Therefore credit his capital account.

The direct answer is A: Realisation loss is debited to the partners’ capital accounts. On dissolution, the Realisation Account records the sale of assets and payment of liabilities. Its profit increases partners’ capital, so realisation profit is credited in their agreed profit-sharing ratio. Its loss decreases their capital, so realisation loss is debited. A is correct because a loss is a reduction. B, general reserve, is an accumulated gain already belonging to the partners; it is distributed by crediting their capital accounts. C, realisation profit, increases capital and is credited, not debited. D, interest on capital payable, is an amount due to partners and therefore increases their capital or current accounts, so it is credited. The useful rule is: items that increase a partner’s claim are credited, and items that reduce it are debited. Memory cue: loss means less capital, therefore debit.

Realisation profit increases partners' capital, so it goes to credit side. Other items may reduce capital.

The direct answer is A: after final settlement, all partners’ capital accounts should close. A capital account is a record of what the firm owes a partner or what the partner owes the firm. During dissolution, assets, liabilities, reserves, realisation profit or loss, and final adjustments are transferred to these accounts. The remaining balance is then paid to the partner or recovered from the partner. After that payment or recovery, the balance becomes zero and the account is closed. A is therefore the correct final-check statement. B is wrong because a capital account may show a credit balance or, in some cases, a debit balance; it does not always show debit. C is wrong because realisation profit is distributed among partners in the profit-sharing ratio. D is wrong because partners are normally paid through the firm’s Cash or Bank Account. The exam check is simple: after every final amount is settled, no capital-account balance should remain.