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If a partner brought goods as capital and it was debited to Purchases Account what error will occur in capital account?

Answer and explanation

Correct answer: Capital will be understated because partners capital account is not credited

Goods are capital contribution and partners capital account should be credited. Posting to purchases misstates capital contribution.

Related tags

Goods As CapitalErrorCapital AccountCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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