Under fluctuating capital method share of loss was ignored instead of being debited. Loss amount is eight thousand rupees. What is the effect on closing capital?

Correct answer: Capital will be overstated by eight thousand rupees

Direct answer: Option A, capital will be overstated by Rs 8,000. In the fluctuating capital method, a partner’s share of loss is debited to the capital account because loss reduces the partner’s claim. Step by step: correct accounting would subtract Rs 8,000 from capital; the error omitted that debit; consequently the recorded capital remains Rs 8,000 higher than it should be. Option A is correct. Option B, understated by Rs 8,000, reverses the effect: omission of a reduction cannot make the balance smaller. Option C, overstated by Rs 16,000, counts the error twice; only one Rs 8,000 loss entry was missed. Option D, no effect, is wrong because the closing balance is directly affected by the omitted debit. Simple check: correct capital = reported capital minus Rs 8,000, so reported capital exceeds correct capital by Rs 8,000. Memory cue: missed debit means the balance is too high by that debit.