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If payment is wrongly debited to capital account after amount was transferred to loan what will be the effect on loan account?

Answer and explanation

Correct answer: Loan balance will be overstated

After transfer the payment should be debited to loan account. If debited to capital account the loan will not reduce and will be overstated.

Related tags

Partners-LoanErrorWrong-AccountPartner's Loan AccountPartner S Loan AccountReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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