Assertion (A): Drawings against capital is transferred to Partner’s Current Account, if capital is fixed.
Assertion (A): Drawings against capital are transferred to Partner’s Current Account, if capital is fixed.
Reason (R): Drawings whether against capital or profit are debited to Drawings Account.
In the context of the above two statements, which of the following is correct?
a) Assertion (A) and Reason (R) are correct but the Reason (R) is not the correct explanation of Assertion (A).
b) Assertion (a) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
c) Assertion (A) is correct but the Reason (R) is not correct.
d) Both Assertion (A) and Reason (R) are incorrect.
Anurag Pathak Changed status to publish April 15, 2023
Ans – d)
When Capital is fixed, the drawing against capital is recorded at the debit side of the Capital account itself.
The Journal entry is
Partner’s Capital A/c Dr. To Bank A/c
Thus Assertion (A) is incorrect.
Drawings against Capital are always debited to the capital account.
whereas, drawings against profit are debited to the Drawings Account.
Thus Reason (R) is also incorrect.
Anurag Pathak Changed status to publish April 4, 2023
