If a partner pays personal expenses through the firm and the deed does not allow it, how is it generally treated?

Correct answer: Partner's drawings

The governing concept is the separation between the firm’s business transactions and a partner’s personal transactions. A personal expense gives the benefit to the partner rather than to the partnership business. Therefore, even if the payment is made from the firm’s cash or bank account, it is not recorded as an ordinary business expense. It is treated as drawings of the concerned partner and is posted to the drawings account or, under the relevant system, to that partner’s current account. The amount reduces the partner’s claim or balance available in the firm. It cannot increase capital, create goodwill or become a legitimate trading expense merely because the firm made the payment. Thus option A is correct.