If a partner pays a firm’s expense from personal funds, what adjustment is made in the partner’s account?

Correct answer: Credit the partner’s account

The governing accounting principle is that the firm and its partners are treated as separate accounting interests. When a partner pays a firm expense personally, the firm receives the benefit of the payment without using its own cash. Consequently, the firm owes that amount to the partner, creating a liability or credit balance in the partner’s account. The partner’s account is therefore credited with the expense paid on behalf of the firm. A debit would wrongly suggest that the partner owes money to the firm. The Drawings Account is inappropriate because the payment is not a withdrawal for personal use. The Profit and Loss Appropriation Account is also irrelevant; the expense belongs to business operations and is settled through the partner’s account. Hence option A is correct.