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At the time of dissolution, if a partner's capital account shows a final credit balance of ₹22,000, what will the firm do?

Answer and explanation

Correct answer: Pay ₹22,000 to the partner

A final credit balance in a partner’s capital account represents the amount payable by the firm to that partner. Therefore, the firm will pay ₹22,000 through cash or bank. Option B is incorrect because an amount is received from a partner when the partner’s account has a final debit balance. Exam tip: Credit balance means payment to the partner; debit balance means payment received from the partner.

Related tags

Dissolution Of PartnershipPartner Capital AccountCredit BalanceFinal SettlementRealisationPartner AccountsDissolution Of A Partnership FirmAccountancy

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