Adjustments

Correct answer: A. To correct an old error or an omitted item

The governing concept is rectification through an adjustment entry. Partnership accounts may contain an omitted item, a wrong amount, an incorrect debit or credit, or an item recorded in the wrong account. An adjustment is prepared to correct that earlier treatment without reopening or rewriting all completed accounts. Therefore option A correctly states the main purpose. It may affect partners' capital or current accounts, profit distribution, or another relevant account depending on the error. Option B is unrelated to the purpose of an adjustment, while options C and D describe business or banking decisions, not accounting rectification. Thus the nature of the original error must be identified before the correcting entry is passed.

Correct answer: A. Adjustment table

Adjustment table shows the net effect on each partner. It makes passing only the difference entry easy.

Correct answer: A. The partner to whom salary is due

The direct answer is A: the partner to whom the salary is due. Partner salary is an appropriation or distribution of profit in favour of a particular partner, not an amount payable to customers, a bank, or a creditor. If the salary was omitted, the correction must give the omitted benefit to the concerned partner. That partner’s capital account or current account is credited, depending on the accounting arrangement used by the firm. Option A is correct because the salary belongs specifically to that partner. Option B is wrong because customers are external parties and do not receive partner remuneration. Option C is wrong because the bank is only a financial institution and has no claim to the omitted salary. Option D is wrong because a creditor’s claim is a liability of the firm, not partner salary. The correction should also consider any related change in profit distribution, but the direct credit is to the partner entitled to salary. Remember: identify the person who earned the omitted benefit.

Correct answer: A. Partners account will be credited

Interest on capital is payable to partner. If omitted it is corrected by crediting partners account.

Correct answer: A. It will be debited

The governing concept is that interest on drawings is an amount recoverable from the partner because the partner used firm funds for personal withdrawals. It is therefore debited to the partner's capital or current account, according to the accounting system, and credited to the Interest on Drawings Account. If it was omitted, the correcting entry must debit the concerned partner's account for the interest amount. Hence option A is correct. Option B reverses the personal liability, option C ignores the omitted income and corresponding charge, and option D introduces goodwill even though no goodwill transaction is involved. The exact account receiving the debit depends on whether capitals are fixed or fluctuating.

Correct answer: A. Correct share and share already given

For correction compare correct share with wrongly distributed share. The difference becomes the basis of adjustment entry.

Correct answer: A. It will be credited

An adjustment table compares the amount that should have been credited to each partner with the amount actually credited. If a partner received less profit than the correct amount, that partner still has an additional amount due from the firm or from the partners who received excess profit. The correction must therefore increase that partner’s account.

An increase in a partner’s entitlement is recorded by crediting the partner’s account. For example, if the correct share is ₹12,000 but only ₹10,000 was given, the missing ₹2,000 is credited to that partner. The corresponding debit is made to the partners who received too much, according to the adjustment. Hence option A is correct. Deleting the account or debiting the underpaid partner would move the correction in the wrong direction.

Correct answer: A. It will be debited

In an adjustment table, the purpose is to correct the amounts of profit that partners should have received compared with what they actually received. If a partner has received more profit than the correct amount, that partner has been given an excess benefit. The excess must be taken back through the adjustment entry.

An amount recoverable from a partner is shown by debiting that partner’s account. The debit reduces the partner’s credit or benefit by the excess amount and transfers the correction to the partner who was undercredited. Therefore option A is correct. A credit would be suitable for a partner who had received less than the amount properly due, not for one who received excess profit.

Correct answer: A. Credit five thousand rupees

A was underpaid, so he is entitled to an additional Rs.5,000. When a partner is due more profit, his current/capital account is increased (credited). Therefore A's account is credited by Rs.5,000. Option B is wrong because debiting A would reduce his balance, which is contrary to being owed more. Option C is wrong because an adjusting entry is required. Option D describes where the balancing debit may come from (other partners), but the question asks specifically what happens to A's account — it is credited. Exam tip: Profit share increases a partner's account (credit); a shortfall requires a credit entry to the partner's account during adjustment.

Correct answer: A. Debit ₹3,000 to B's account

When a partner has been paid excess profit, the excess must be recovered from that partner. Thus B's account is debited by ₹3,000 to reduce B's balance and restore correct profit distribution. The closest distractor (credit) is wrong because crediting B would increase his balance instead of recovering the excess. Transferring to reserve or making no adjustment are irrelevant to correcting overpayment. Exam tip: identify who was overpaid (debit their account) and who was underpaid (credit their account) when making profit adjustments.

Correct answer: A. Credit side

A partner who receives a benefit has an increased claim on the firm, so his/her account is credited in the adjustment entry. Therefore the correct side is the credit side. The closest distractor, 'Debit side', is wrong because debiting would reduce the partner’s claim, which contradicts receiving a benefit. Exam tip: memorize the rule — beneficiary partner is credited; the partner bearing the loss is debited.

Correct answer: A. डेबिट पक्ष (Debit side)

A partner from whom an amount is recoverable is a debtor/receivable for the firm (an asset). According to accounting rules, assets and receivables are recorded on the debit side, so the partner’s account is debited in the adjustment entry. 'Credit side' is incorrect because crediting would record a liability or reduce the firm’s claim rather than record an amount recoverable. 'Only in narration' and 'Outside the balance sheet' are also wrong since recoverable amounts must be properly recorded in the accounts to reflect correct balances. Exam tip: remember — debtor (to be received from) = debit; creditor (to be paid to) = credit.

Correct answer: A. Profit ratio correction adjustment

Profit shared in wrong ratio is compared with correct ratio. Difference is adjusted in capital or current accounts.

Correct answer: A. Six thousand rupees

In the ratio 3:2 the total parts = 3+2 = 5. So A's share = (3/5) × Rs. 10,000 = Rs. 6,000. Option B (Rs. 5,000) is incorrect because it represents an equal split, not the 3:2 ratio. Exam tip: always add the ratio parts first, then multiply the total profit by the relevant fraction for the partner's share.

Correct answer: A. Rs 1,000 excess

The governing concept is comparison of the amount actually received with the amount due under the correct ratio. Equal sharing gave B one-half of Rs 10,000, so B actually received Rs 5,000. In the correct ratio 3:2, B's share is 2/5 of Rs 10,000, which equals Rs 4,000. Therefore B received Rs 5,000 − Rs 4,000 = Rs 1,000 in excess. Option A is correct. Option B reverses the comparison, option C uses an incorrect difference, and option D ignores that equal sharing is not the same as a 3:2 allocation. The excess would be adjusted against the partner who received less.

Correct answer: A. Higher by ₹6,000

Interest on capital is an expense/appropriation that should reduce profit. Omitting the ₹6,000 interest means that expense was not deducted, so distributable profit is overstated by ₹6,000. The closest distractor (B) is wrong because omission increases, not decreases, profit. Exam tip: Always review the Profit & Loss Appropriation and adjustment column for omitted charges and correct the distributable profit before division among partners.

Correct answer: A. Lower by Rs. 2,000

Interest on drawings is credited to the Profit & Loss Appropriation (an income for the firm) and therefore increases available profit. Omitting interest of Rs. 2,000 means that income is not recorded, so available profit is understated by Rs. 2,000. The closest distractor (Higher by Rs. 2,000) is wrong because omission cannot increase profit; the Rs. 4,000 choice is incorrect as there is no doubling effect. Exam tip: Always verify that interest on drawings is credited to P&L appropriation — any omission reduces available profit by the omitted amount.

Correct answer: A. It will be credited

Commission payable to a partner is an appropriation of profit and is credited to the partner's current account. When such a commission is omitted, the correcting entry credits the partner's account and debits the Profit & Loss Appropriation A/c. Option B is wrong because debiting would reduce the partner's balance, contrary to a payable commission. Exam tip: if commission is payable to the partner, credit the partner; if the partner pays commission to the firm, debit the partner.

Correct answer: A. It will be debited

Drawings are partner withdrawals and reduce the partner's capital. They are recorded as a debit (to Drawings A/c or directly to the partner's capital). If omitted, the partner's capital will be overstated and the omitted amount must be entered as a debit — so his account will be debited. The distractor 'credited' is incorrect because a credit would increase the capital balance; 'no effect' is wrong because omission changes the capital balance; 'added to profit' is wrong because drawings are not income. Exam tip: Check the debit side for drawings when reconciling partners' accounts; omission is corrected by posting the missing debit entry.

Correct answer: A. Debit the partner's account

A partner's personal expense paid by the firm is treated as the partner's drawings. The correct journal entry is: Partner’s Account Dr. To Bank/Cash. Since the payment has already been made but not recorded, the required adjustment is to debit the partner’s account. Option B is the reverse (wrong); option C mentions the cash/bank credit which is the other side of the entry but by itself does not identify the primary adjustment asked; option D (goodwill) is unrelated. Exam tip: personal payments by the firm are recorded as drawings — always debit the partner's account and credit cash/bank.

Correct answer: A. Current Account

In fixed capital regular items go to current account. Capital account is kept for permanent changes.

Correct answer: A. Capital Account

In fluctuating method profit salary interest and drawings go to capital account. Therefore capital balance keeps changing.

Correct answer: A. Current account

Under the fixed capital method a partner’s capital account remains unchanged for routine transactions; day-to-day items such as drawings, partner’s share of profit or interest on drawings are posted to the current account. Hence drawings should have been debited to the current account. Options B and C are irrelevant (sales relates to revenue, goodwill to intangible assets) and option D is wrong because creditors record external payables, not a partner’s withdrawals. Exam tip: fixed vs fluctuating capital — use current accounts for routine transactions under fixed capital.

Correct answer: A. Equal

In every journal entry debit and credit are equal. Adjustment entry also follows double entry system.

Correct answer: A. Error in calculation or classification

An adjustment table records correcting entries between partners. Like any properly balanced accounting entry, its total debit amount must equal its total credit amount. Debits and credits represent opposite sides of the same correction, so they cannot remain unequal when the table has been prepared correctly.

If the totals do not match, the difference signals an error. The mistake may be in arithmetic, in copying an amount, in applying the ratio, or in classifying a partner as receiving or giving an adjustment. The table should therefore be checked again carefully. Option A is correct. The mismatch does not indicate that cash is necessarily higher, nor does it mean that a bank is closed.