The deed says market rent will be recovered if firm property is used personally. Which account may be credited for this amount?

Correct answer: Firms income or rent recovery account

When a partner uses firm property personally, the firm is entitled to recover the agreed market rent. That recovery represents income or compensation for the firm because the property could otherwise have been used for business or rented to another person. Accordingly, the concerned partner’s account is debited for the amount payable, and the firm’s income or rent-recovery account is credited.

Therefore option A is correct. The amount is not partner salary, goodwill, or purchases: none of those accounts represents rent earned by the firm. The credit records the firm’s claim or income, while the debit records the partner’s personal use. The exact account title may vary according to the accounting system, so “firm’s income” or “rent recovery” is appropriate. The important principle is that private use creates an amount recoverable by the firm.