Question

What does the excess of debits over credits in profit and loss adjustment account indicate? (Answer in one sentence)

Answer 1

LOSS OF THE BUSINESS

Answer 2

The excess of debit on credits in the profit and loss adjustment account indicates the amount of net loss.

For this reason, this loss has to be adjusted to the old partners in their old profits. Because no new partner is obliged to bear the loss caused by the activity of any old partner.