Capital Accounts

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.

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

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

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.

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

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

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

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

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

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

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

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

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

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

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.

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.

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

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

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

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

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

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

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

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.

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