If A's capital account has a closing balance of Rs 64,000 as a credit (not a debit), what does this indicate?

Correct answer: Firm owes capital to A

A credit balance in a partner's capital account means the partner has capital standing in his favour — i.e. the firm owes that amount to the partner (a liability for the firm). Option B is incorrect because if the partner owed money to the firm, the capital account would show a debit (overdrawn) balance. Option C describes an overdrawn/negative capital situation which would be a debit balance, not a credit. Option D is irrelevant: a closing balance does not imply the account is closed. Exam tip: remember the simple rule — credit balance = partner's claim (liability of firm); debit balance = partner owes the firm.