The firm paid ₹12,000 for partner A’s personal expense in cash but recorded it as a business expense. What effect will the rectifying entry have on A’s account?

Correct answer: A’s capital or current account will be debited by ₹12,000

A partner’s personal expense is not a business expense; it is treated as the partner’s drawings. Since the incorrect entry debited a business expense, the rectifying entry will credit that expense and debit A’s capital or current account by ₹12,000. Therefore, option A is correct. Option B is incorrect because a personal expense reduces the partner’s account rather than increasing it. Exam tip: Always debit the concerned partner’s account for personal payments made by the firm.