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If debit balance of drawings account is not closed at year end what may be the effect on capital account?

Answer and explanation

Correct answer: Capital may appear higher than actual

Drawings must be transferred to capital or current account. If not transferred partners capital is not reduced and may appear higher.

Related tags

Drawings ClosingCapital OverstatementErrorCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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