If B’s current account has a credit balance of ₹12,000, how will it be shown in the balance sheet?

Correct answer: On the liabilities side

The governing concept is the balance-sheet treatment of a partner’s current-account balance. A credit balance means that, after considering items such as profit, interest or salary credited and drawings debited, the firm owes B a net amount of ₹12,000. Since this amount is payable to the partner, it represents an internal liability of the firm. It is consequently shown on the liabilities side of the balance sheet, generally under partners’ capital and current accounts. A debit balance would normally be shown as an asset, but that is not the fact here. The Trading Account and Profit and Loss Account are performance statements, not places for displaying this balance.