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The deed says a partners capital account must not have debit balance. If a debit balance appears at year end what does it indicate?

Answer and explanation

Correct answer: Excess drawings or loss adjustment needs correction

A debit capital balance shows deficiency in capital. As per deed amount should be recovered or adjusted through current account.

Related tags

Debit CapitalExcess DrawingsCapital ControlPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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