If interest on B's drawings of Rs.1,000 was not charged to B, how would B's balance (capital/current account) appear?

Correct answer: Overstated

Interest on drawings should be recovered from the partner and thereby reduce the partner’s capital/current balance. If the Rs.1,000 interest on B’s drawings is not charged, that deduction is omitted and B’s balance remains higher by Rs.1,000 — i.e. it is overstated. The closest wrong option is "Understated", which describes the opposite effect; omission of a charge increases, not decreases, the partner’s balance. Exam tip: After preparing the appropriation/adjustment entries, always recheck partners' current/capital accounts for omissions or commissions that cause overstatements or understatements.