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Under fixed capital method A current account has debit balance. The partner says treat it as capital and allow interest. Why may this be wrong?

Answer and explanation

Correct answer: Debit current balance is recoverable not capital investment

Debit current account shows amount due from partner to firm. Treating it as capital investment can give wrong base.

Related tags

Current AccountDebit BalanceInterest BaseCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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