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In an adjustment entry, the account of a partner who is to receive a benefit appears on which side?

Answer and explanation

Correct answer: 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.

Related tags

Partnership AccountsAdjustmentsAccounting FundamentalsPartner AccountsAdjustment EntryPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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