Under the fixed-capital method, B’s current account shows a credit balance of ₹7,500. What does it mean?

Correct answer: Firm owes an amount to B

The governing concept is the interpretation of a credit balance in a partner’s current account under the fixed-capital method. The fixed capital remains separate, while the current account records items such as profit share, interest, salary, commission, drawings and losses. A credit balance of ₹7,500 means that credits exceed debits by ₹7,500, so the net claim stands in B’s favour. The firm therefore owes B ₹7,500, which is a liability of the firm. Option B states the reverse meaning. Option C is unsupported because the current balance does not make fixed capital zero, and option D would normally create a debit or reduce the balance rather than explain a credit balance.