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Question
B Debit balance. C Either (a) or (b). D None of these.
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Solution
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Thepartnership capital account is an equity account in the accounting recordsof a partnership. It containsthe following types of transactions: 1. Initial and subsequentcontributions by partners to the partnership, in the form of either cash or themarket value of other types of assets. 2.Profits and losses earned by the business, and allocated to thepartners based on the provisions of the partnership agreement. 3.Distributions to thepartners. The ending balance in the account is theundistributed balance to the partners as of the current date. Partner's capital account caneither have a credit balance or debit balance. A capital account having a credit balance means business owes partnersthat much amount, while if a capitalaccount has a debitbalance it means partners owebusiness that much amount or we can also say that partners have overdrawntheir capital account.
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