Under the fluctuating capital method, goodwill adjustment requires crediting A by Rs 12,000 and debiting B by Rs 8,000. Whose capital balance will increase?

Correct answer: Only A

The governing concept is the effect of debit and credit entries under the fluctuating capital method. In this method, all items affecting a partner are recorded directly in that partner's capital account. A credit entry increases a capital balance, while a debit entry decreases it. Therefore, crediting A by Rs 12,000 increases A's capital balance. Debiting B by Rs 8,000 reduces B's capital balance; it does not increase it. Hence only A's capital balance increases, making option A correct. Option B reverses the effect of the debit, option C incorrectly treats both entries as increases, and option D ignores the basic rules of capital-account entries. The amounts do not change this conclusion; the nature of the entry determines the direction.