The current account of the partners will always have (a) Debit balance (b) Credit Balance (c) Either of the two (d) None of these
Answers
(a) Debit balance
(b) Credit Balance
(c) Either of the two ✔️✔️✔️
(d) None of these
Answer:
The current account of the partners will always have (a) Debit balance (b) Credit Balance
(c) Either of the two
Explanation:
Normally Partner's Current Account has a Credit Balance but, if a partner has withdrawn more than his or her share of profits, then it will have a Debit Balance. The credit balances of Partner's Current Account are shown on the Liabilities side of Balance Sheet, as much of amount due to them.
Normally Partner's Current Account has a Credit Balance but, if a partner has withdrawn more than his or her share of profits, then it will have a Debit Balance. The credit balances of Partner's Current Account are shown on the Liabilities side of Balance Sheet, as much of amount due to them. Debit balances are shown on the Asset side of the balance sheet.
Partner's Current Account is an account supported by Capital Account and prepared as per the requirements of the partnership deed. A debit balance of the partner in the partner's current account shows that the partner was withdrawing too much money from the profits. Partners' current accounts are opened when their capital is Fixed.