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A withdrew twelve thousand rupees from the firm. Eight thousand rupees is normal drawings and four thousand rupees is permanent capital withdrawal. Under fixed capital method which is correct?

Answer and explanation

Correct answer: Debit eight thousand to current account and four thousand to capital account

Normal drawings go to current account and permanent capital withdrawal goes to capital account. This distinction is very important in fixed method.

Related tags

Fixed CapitalDrawingsCapital WithdrawalCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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