B's current account shows a debit balance of Rs 17,000 and the capital account shows a credit balance of Rs 95,000. What will be the new capital balance after transferring the current account balance into capital?

Correct answer: Rs 78,000 credit

A debit balance in the current account reduces the partner’s capital. The capital credit balance of Rs 95,000 must be reduced by the current account debit of Rs 17,000: Rs 95,000 − Rs 17,000 = Rs 78,000 credit. Option B (Rs 112,000) is wrong because it adds the debit instead of subtracting it. Exam tip: always note the sign of the current account (debit reduces capital; credit increases capital) before transferring.