Question

if any loan or advance is provided by partner then balance of such loan account should be transferred to​

Answer 1

Answer:

balance sheet of firm.

Answer 2

If any loan or advance is transferred to the partner then the balance of such loan account should be trasferred to asset side of the balance sheet.

• As any loan or advance given to the partner is the liability of the partner as he has to repay that amount.

• Any loan given to partner is asset for the firm as firm has to take back that money according to the agreement and firm has created debtor.

• Loan or advance of any partner can be treated in two ways if there is loan account then balance can be transferred to balance sheet and it can even reduce their capital and loan can be recovered, firm can debit the amount of loan in partners capital account and it will reduce the capital of partner.