Capital Accounts

Correct answer: A. One lakh ten thousand rupees

To find opening capital deduct additional capital and profit from closing capital and add drawings and interest on drawings. The result is one lakh ten thousand rupees.

Correct answer: A. Credit ten thousand rupees

Credit items are thirty seven thousand and debit items are twenty seven thousand. Therefore closing current account is credit ten thousand rupees.

Correct answer: A. Debit eleven thousand rupees

Credit items are twenty thousand and debit items are thirty one thousand. Therefore debit balance of eleven thousand rupees remains.

Correct answer: A. Withdraw eight thousand rupees

Total capital is two lakh sixty thousand and target capital for C is fifty two thousand rupees. C actual capital is sixty thousand so he must withdraw eight thousand.

Correct answer: A. No adjustment is required

One lakh thirty five thousand and ninety thousand are in ratio three to two. Therefore capital is already in target ratio.

Correct answer: A. Credit seventy six thousand rupees

Interest on drawings should be debited and reduces capital. Recording it reduces credit balance by four thousand to seventy six thousand.

Correct answer: A. Current account will be understated and drawings account will be wrong

Interest on capital is payable to partner and should be credited to current account. Crediting wrong account understates the partners current claim.

Correct answer: A. Twenty thousand rupees

Loss should have been debited but was credited. Difference from correct position is double the amount which is twenty thousand rupees.

Correct answer: A. Credit eighty thousand rupees

Adjusting debit current account against capital reduces capital. One lakh minus twenty thousand leaves credit eighty thousand.

Correct answer: A. Credit five thousand rupees

Additional capital credits the capital account. After setting off debit fifteen thousand a credit balance of five thousand remains.

Correct answer: A. Fifty three thousand rupees

Net equipment contribution is sixty thousand minus twelve thousand which is forty eight thousand. Adding five thousand cash gives total credit fifty three thousand.

Correct answer: A. Agreed value

Asset brought by partner is recorded at the agreed value accepted by partners. Do not use cost if it is only additional information.

Correct answer: A. Total partner balance will be understated by nine thousand rupees

Permanent withdrawal should go only to capital account. Extra debit in current account understates total partner claim by nine thousand rupees.

Correct answer: A. Ninety thousand rupees each

Total capital is one lakh eighty thousand. Dividing equally gives target capital ninety thousand rupees each.

Correct answer: A. Ninety thousand rupees

Direct answer: Option A, Rs 90,000. The capital ratio is 4:3:1, so total ratio parts are 4 + 3 + 1 = 8. Total capital is Rs 2,40,000. One part equals Rs 2,40,000 ÷ 8 = Rs 30,000. The second partner has 3 parts, so target capital is 3 × Rs 30,000 = Rs 90,000. Option A is correct. Option B, Rs 1,20,000, represents four parts, which belongs to the first partner. Option C, Rs 30,000, represents only one part, belonging to the third partner. Option D, Rs 60,000, represents two parts and is not the second partner’s stated three-part share. The ratio allocates the whole total, so always add its parts before calculating one part. Memory cue: total ÷ total ratio × the required partner’s ratio.

Correct answer: A. B

Total capital is two lakh forty thousand and target capitals are one lakh twenty thousand ninety thousand and thirty thousand. B has deficiency of ten thousand.

Correct answer: A. Withdraw ten thousand rupees

A target capital is one lakh twenty thousand and actual capital is one lakh thirty thousand. Therefore A should withdraw ten thousand rupees.

Correct answer: A. Debit current balance is recoverable not capital investment

Debit current account shows amount due from partner to firm. Treating it as capital investment can give wrong base.

Correct answer: A. First add credit items then deduct debit items

Credit items increase partners claim and debit items reduce it. This classification makes hard questions easier.

Correct answer: A. One lakh rupees

In fixed capital method current account does not change capital account. If no permanent change occurs capital remains one lakh.

Correct answer: A. Net effect on capital after payment will be zero

Salary credited when due and debited on payment gives equal opposite effects. If paid immediately net effect on capital can be zero.

Correct answer: A. Because it increases partners claim on firm

Commission due is amount payable to partner. Even if unpaid it is credited to capital account and increases claim.

Correct answer: A. Twenty thousand rupees

Both items are credited to partner account. If omitted capital is understated by their total twenty thousand rupees.

Correct answer: A. Drawings are amount withdrawn and interest is cost of that withdrawal

The direct answer is option A: drawings are the amount withdrawn, while interest on drawings is the cost or charge for that withdrawal. Drawings mean the actual money or value taken by a partner from the firm for personal use. Interest on drawings is an additional amount charged because the partner used firm funds during a period. Under the fixed capital method, both are debited to the Current Account, so both reduce the partner’s balance or claim, but they are not the same item. For example, if a partner withdraws Rs 10000 and interest on those drawings is Rs 600, Rs 10000 is the drawing and Rs 600 is the charge for using the firm’s money. Option A correctly identifies both the nature and difference. Option B is wrong because neither item is interest on capital; interest on capital is a credit to the partner. Option C is wrong because drawings are not income, and interest on drawings is income of the firm, not income to the partner. Option D is wrong because goodwill adjustments relate to reputation and partner changes, not ordinary withdrawals. Memory cue: drawing is the amount taken; interest on drawings is the price of using it.

Correct answer: A. Capital may appear higher than actual

Drawings must be transferred to capital or current account. If not transferred partners capital is not reduced and may appear higher.