Question

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What is capital deficiency?

Answer 1

Answer:

Capital deficiency refers to a debit balance in a partners capital account after allocation of gain or loss.No capital deficiency means all partners have a credit balance after allocation of gain or loss.When a partnership is liquidated,all partners may have credit balances in their capital accounts.

Explanation:

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Answer 2

Answer:

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capital defiency,.

The debit balance of an insolvent partner's capital account that cannot be satisfied due to lack of surplus balance is called capital deficiency. This deficiency is to be borne by all the solvent partners in their profit sharing ratio. Concept: Dissolution of Partnership Firm.