If Partner's capital is written on the Asset side of balance sheet then , what is the meaning of that???
Answers
Answered by
0
Hello,
Drawings are the cash or goods withdrawn by Sole Proprietor or Partners in case of Partnership for own use.
Though normally the value of drawings are reduced from Capital Account of Sole Proprietor and Partners Capital, but sometime Drawings appear unders Assets Side too.
In case of Partnership when partners are following Fixed Capital accounting Concept then excess of drawings by partner create excess debit of Current Account, as we need to keep our Fixed capital Intact that drawings comes under Assets Side as Current Account of Partners.
In normal case Drawings cannot comes under assets side, because goods or money withdrawn by partner or Sole Proprietor needs to be reduced from their capital.
Hope it will help you.
Thank You.
Drawings are the cash or goods withdrawn by Sole Proprietor or Partners in case of Partnership for own use.
Though normally the value of drawings are reduced from Capital Account of Sole Proprietor and Partners Capital, but sometime Drawings appear unders Assets Side too.
In case of Partnership when partners are following Fixed Capital accounting Concept then excess of drawings by partner create excess debit of Current Account, as we need to keep our Fixed capital Intact that drawings comes under Assets Side as Current Account of Partners.
In normal case Drawings cannot comes under assets side, because goods or money withdrawn by partner or Sole Proprietor needs to be reduced from their capital.
Hope it will help you.
Thank You.
Similar questions