Partner Accounts

Accumulated loss reduces capital so it is debited in the profit sharing ratio. Adjust all accumulated losses in exams.

The general reserve is distributed among the partners in their profit-sharing ratio. The total parts are \(2+2+1=5\), and C has 1 part. Therefore, C’s share is \(₹30,000 \times \frac{1}{5}=₹6,000\). ₹10,000 would result from dividing the reserve equally among three partners, which ignores the given 2:2:1 ratio. Exam tip: For reserve distribution, divide the reserve by the total ratio parts and multiply by the concerned partner’s share.

A debit balance in the Profit and Loss Account represents an accumulated loss, so it is debited to the partners’ Capital Accounts in their profit-sharing ratio. A’s share is \(3/(3+1)=3/4\). Therefore, the amount debited to A’s account is ₹24,000 × \(3/4\) = ₹18,000. ₹6,000 is B’s share, not A’s. Exam tip: accumulated losses are debited to partners’ Capital Accounts, whereas accumulated profits are credited.

Drawings are amounts withdrawn by a partner so they are debited to capital account. Treat drawings as reduction of capital in exams.

The direct answer is option B: credit balance ₹62,000. In a partner’s capital account, a credit balance represents capital belonging to the partner. Drawings are amounts taken out by the partner, so they reduce capital. Step by step: opening credit capital ₹70,000 minus drawings ₹8,000 equals ₹62,000, and the remaining balance stays credit because the capital is still positive. Option A, credit ₹78,000, is wrong because it adds drawings instead of subtracting them. Option B is correct because drawings decrease the capital account. Option C, debit ₹8,000, shows only the drawings amount and ignores the original capital; it is not the final balance. Option D, debit ₹70,000, reverses both the amount and the normal balance. Remember: drawings reduce capital, so subtract them from the capital balance.

Interest on capital due is income for the partner so it is credited to capital account. Add outstanding adjustments in final settlement.

Interest on drawings is payable by the partner to the firm so it is debited to capital account. Deduct it from capital in exams.

Interest on drawings is debited to capital. ₹2500 is deducted from ₹45000 so A will receive ₹42500.

Final credit capital balances are paid through cash or bank. Close capital accounts through cash or bank in exams.

Credit capital balance is paid to the partner so capital is debited and bank is credited. Remember the direction of payment in exams.

Debit capital balance is received from the partner. Therefore bank is debited and partner's capital is credited.

Add profit to capital and deduct the asset taken. ₹50000 plus ₹8000 minus ₹12000 equals ₹46000.

At dissolution, a partner’s final payment is based on the amount left in that partner’s account after all items affecting it are recorded. A realisation loss is borne by the partners and reduces their capital. Drawings have already been taken out by the partner, so they also reduce the amount finally payable.

For B, begin with the credit balance of ₹30,000. Subtract the realisation loss of ₹6,000 and drawings of ₹4,000: ₹30,000−₹6,000−₹4,000=₹20,000. Thus option B is correct. The answer assumes that the stated drawings are to be adjusted through B’s account and that ₹30,000 is the relevant capital balance. Options A, C and D do not apply both deductions correctly.

Taking over liability credits capital and loss debits capital. ₹20000 plus ₹5000 minus ₹7000 equals ₹18000.

A partner who cannot pay his capital deficiency is called insolvent. In exams this connects with a debit capital balance.

Amount received from an insolvent partner reduces his debit balance so his capital account is credited. Record bank debit and capital credit in exams.

Realisation profit or loss is shared in the profit sharing ratio. Use capital ratio only when a specific rule requires it.

If no ratio is given partners share profits and losses equally. In exams divide equally when the ratio is absent.

The correct answer is option A: B’s adjusted capital is ₹36000. On dissolution, a realisation profit is transferred to the partners’ capital accounts in their profit-sharing ratio. The ratio is 4:3, so total parts are \(4+3=7\). B receives 3 parts out of 7. B’s share of the ₹14000 profit is \(\frac{3}{7}\times14000=₹6000\). Add this credit to B’s original capital: ₹30000+₹6000=₹36000. Option A is correct. Option B, ₹38000, would add ₹8000 and incorrectly give B a larger share than the 3:7 allocation. Option C, ₹44000, adds the whole profit to B and ignores the ratio. Option D, ₹30000, leaves the capital unchanged and ignores B’s profit share. The calculation assumes there are no other stated adjustments, such as drawings or losses. Memory cue: divide profit into ratio parts first, then add the partner’s share to that partner’s capital.

A's loss share is 2/4 which is ₹12000. Final capital of A is ₹50000 minus ₹12000 equals ₹38000.

The governing concept is the interpretation of a credit balance in a partner’s Capital Account. A credit balance means that the partner’s capital, accumulated profits and other credits exceed drawings, losses and other debits. Consequently, the firm owes that net amount to the partner, and it is paid or otherwise settled on dissolution. Option B describes a debit balance, where the partner owes money to the firm. The condition that the firm’s assets are nil does not by itself determine the balance in an individual partner’s account. Every partnership must have a basis for sharing profits, so option D is also irrelevant. Hence, option A is correct.

Closing capital accounts means amounts payable to or recoverable from partners have been settled. Treat final closing as completion of dissolution in exams.

A debit balance is recovered from the partner and after payment the capital account is closed. In exams treat debit capital as an amount receivable by the firm.

The relevant dissolution rule is that a liability taken over by a partner is treated as an amount payable by the firm to that partner through the partner’s capital account. The partner agrees to discharge the firm’s obligation personally, so the firm’s liability is removed from the books. The accounting entry is Realisation Account Dr. to Partner’s Capital Account; consequently, the partner’s capital account is credited. Therefore option A is correct. A debit would be appropriate for a realisation loss or drawings, not for assuming a liability. An entry is necessary because both the liability and the partner’s claim must be recorded.

The current account balance is finally settled through the capital account. In exams merge current account into capital account under fixed capital method.