If a partner’s Capital Account already shows a debit balance, what does it indicate on dissolution?

Correct answer: An amount is due from the partner

The governing concept is the meaning of a debit or credit balance in a partner’s Capital Account. A debit balance means that the debits in the account exceed the credits. In substance, the partner has withdrawn more than the amount standing to the partner’s credit, or the partner has borne losses, so the partner owes that amount to the firm. During final settlement on dissolution, the debit balance is recovered from the partner, subject to the applicable partnership rules. Option B is incorrect because profit normally creates a credit, not a debit. Option C describes a credit balance, and option D is unrelated to the balance’s meaning. Therefore, option A is correct.