If any asset is taken over by partner from firm his Capital A/c will be ________. (Fill in the blank by choosing correct option)
a) credited
b) debited
c) added
d) none of these
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Option A
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Answer:
The correct answer would be A, Credited.
Explanation:
In financial statements, there are always two sides of an account head. Capital is also called the Owners Equity. Capital is the wealth possessed by a business. It is equivalent to the Assets less Liabilities. It can be written as Assets - Liabilities = Owners Equity/Capital. When an asset is taken out of the company, it means the asset account is being decreased, which means the capital of the company also decreases. So the capital account of the company will be credited by the amount of asset that is being taken out of the firm.
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