Q 2. Balance of partner's current accounts are: a. debit balance b. credit balance C. debit or credit balances d. neither debit nor credit balance ttond diligently to his.
Answers
HEY!!
Answer:
C
Either (a) or (b).
The partnership capital account is an equity account in the accounting records of a partnership. It
contains the following types of transactions:
1. Initial and subsequent contributions by partners to the partnership, in the form of either cash or the market value of other types of assets.
2. Profits and losses earned by the business, and allocated to the partners based on the provisions of the partnership agreement.
3. Distributions to the partners.
The ending balance in the account is the undistributed balance to the partners as of the current date.
Partner's capital account can either have a credit balance or debit balance.
A capital account having a credit balance means business owes partners that much amount, while if a capital account has a debit balance it means partners owe business that much amount or we can also say that partners have overdrawn their capital account.
hope this is helpful!
Have a good day!