Partner Accounts

In a partnership, an amount payable to a partner is a claim of that partner against the firm. When the firm is dissolved, such a claim is settled through the partner’s capital or current account according to the accounting treatment used. A payable salary therefore increases the amount due to that partner and is credited to the partner’s account.

The salary payable is ₹2,000, so ₹2,000 is entered on the credit side of the partner’s capital account. This increases the credit balance payable to the partner and makes option A correct. It is not a debit because the partner is receiving a benefit from the firm, not owing this amount to the firm. The amount is also not ₹4,000 and does have an accounting effect.

Interest on drawings is charged because the partner has used firm money for personal purposes during the period. It is therefore an amount recoverable from the partner. In the partner’s account, a recoverable amount is recorded on the debit side, because it reduces the amount ultimately payable to that partner.

Here the interest on drawings is ₹1,000. The partner’s capital account is consequently debited by ₹1,000, so option A is correct. It is not credited, because the partner is not earning this amount; the firm is receiving it from the partner. The amount is not doubled, and no-entry is unsuitable because the stated interest has to be recorded.

Unrecorded asset is also recorded at agreed value. When taken by partner, capital account is debited.

Unrecorded liability is recorded at accepted amount. The partner taking it is credited in capital account.

Deferred advertisement expense is a fictitious asset and is treated like loss. Debit it in profit sharing ratio.

The governing concept is that a fictitious asset has no realizable value and is written off through the partners’ capital or current accounts in their profit-sharing ratio. The ratio 3:2 contains five parts, and the second partner has two parts. Therefore, the second partner’s share of the write-off is ₹15,000 × 2/(3+2) = ₹15,000 × 2/5 = ₹6,000. Option A is correct. Option B is the first partner’s three-fifths share, option C is one-fifth, and option D is the entire amount rather than the second partner’s burden. The write-off is treated as a loss to be borne by the partners.

Balance left after settling liability is accumulated profit. Credit it to capital accounts in profit sharing ratio.

After deducting liability from reserve, seven thousand rupees remains. This is distributable among partners.

This rule relates to unpaid capital deficiency of an insolvent partner. At easy level, identifying the situation is important.

Solvent partners generally bear deficiency in their capital ratio. Also check any special condition in the question.

The governing concept is the treatment of an insolvent partner’s deficiency on dissolution. Under the stated assumption that the solvent partners’ capitals are equal, the deficiency is borne equally by the two solvent partners. Thus, each partner’s burden = ₹8,000 ÷ 2 = ₹4,000. Option A is correct. Option B is the total deficiency, not the amount borne by each partner. Option C would result from dividing by four and has no basis in the facts, while option D would mean that the deficiency is not absorbed by solvent partners. The equal-capital condition makes an equal allocation appropriate for this question.

Deficiency is found by deducting amount received from debit balance. Twelve thousand less five thousand gives seven thousand rupees.

When the firm pays a partner through the bank, its bank balance decreases. A decrease in an asset is credited; therefore, the Bank Account is credited, while the partner’s account is debited. Exam tip: Any payment made from the bank generally results in credit to the Bank Account.

When cash is received from a partner, the firm’s cash balance increases. Since Cash is an asset, an increase in an asset is recorded on the debit side; therefore, the Cash Account is debited. It would be credited when cash is paid out. Exam tip: Remember cash receipt as Cash A/c Dr.

A credit balance in a partner’s capital account represents the amount owed by the firm to that partner after all relevant adjustments. Therefore, a final credit balance of ₹17,000 means ₹17,000 is payable to the partner, making option A correct. A debit balance would indicate an amount recoverable from the partner; the balance alone does not prove absence of loss or insolvency.

A debit balance in a partner’s capital account means that the partner owes money to the firm, so ₹11,000 is recoverable from the partner. A credit balance would mean that the firm has to pay the partner, making option B incorrect. Exam tip: Debit balance means recovery from the partner; credit balance means payment to the partner.

No balance means payable or receivable amount has been settled. In dissolution, all capital accounts should close at the end.

The governing concept is the treatment of dissolution transactions in a partner’s capital account. When a partner takes over a firm’s liability, the partner accepts an obligation that otherwise belonged to the firm. The partner’s capital account is therefore credited with the agreed amount, while the liability is removed from the firm’s books. Hence, option A is correct. An asset taken over by the partner is debited to the partner’s capital account because the partner receives value. Realisation loss is also debited because it reduces the partner’s claim. Interest on drawings, when applicable, is generally a debit to the partner’s account, not the required credit item.

The governing rule is that a partner’s capital account is debited when the partner receives an asset from the firm or when an amount is payable by the partner to the firm. If a partner takes over an asset, the agreed value of that asset is transferred to the partner’s capital account on the debit side, because it reduces the amount finally payable to that partner. Hence option A is correct. General reserve and realisation profit are credits to partners’ capital accounts in the profit-sharing ratio. Expenses paid personally by a partner on behalf of the firm are normally credited to that partner, since the firm owes reimbursement.

The partner paid the firm's liability, so the firm owes him. In such a case, credit the partner's capital account.

The governing concept is settlement of a partner’s loan, including both the principal amount and any interest that has become payable. A’s principal loan is ₹20,000 and the interest due on it is ₹1,000. Therefore, the total amount payable is calculated as ₹20,000 + ₹1,000 = ₹21,000. Option C is correct. Option B includes only the principal and ignores the accrued interest, while option D includes only the interest. Option A is not supported by the data and incorrectly subtracts the interest from the principal. The calculation assumes that the stated interest is payable in full and that no other adjustment or payment has been made.

A debit balance in C’s capital account represents an amount that C owes to the firm. If C can contribute only ₹4,000 against a debit balance of ₹10,000, the unpaid portion is the deficiency. The calculation is ₹10,000 − ₹4,000 = ₹6,000. Therefore, option B is correct. Option A is merely the amount actually paid, option C is the original debit balance before payment, and option D incorrectly adds the payment to the debit balance. The answer assumes that the ₹4,000 is received and adjusted against C’s debit capital balance and that no separate arrangement, such as insolvency treatment under a special rule, is being considered.