The deed requires equal capitals but at year end one partner's capital is short. An entry to bring the shortage will affect which account?

Correct answer: The concerned partner’s capital or current account

The governing concept is adjustment of partners’ agreed capital balances. If the deed requires equal capitals, a deficiency belongs to the partner whose capital balance is below the required level. The correcting entry must therefore be made through that partner’s capital account when the capital method uses capital accounts for the adjustment, or through the partner’s current account when the firm maintains fixed capital accounts and regular adjustments are routed through current accounts. Thus option A is correct. A customer account and a supplier account represent external trade relationships and are unrelated to the partners’ capital equalisation. Goodwill is an intangible business value and should not be used merely to correct a partner’s short capital unless the facts specifically involve a goodwill adjustment.