_______________ a/c is debited for loss on adjustment under past adjustments through profit and loss adjustment account.
_______________ a/c is debited for loss on adjustment under past adjustments through profit and loss adjustment account.
The correct option is C Partner's Capital
There are two ways of
correcting a mistake after finalization of accounts:
1. Through the Profit & Loss Adjustment A/c.
A In this method whatever amount
has been wrongly given to partners is taken back by debiting partners capital
A/c and crediting Profit and Loss Adjustment A/c.
B In the second step Profit &
Loss Adjustment A/c is debited and partners credited with the amounts which
were actually due to them. In this way no balance is left in the Profit &
Loss Adjustment A/c and rectification is made in partners' capital account.
2. Directly through partners' capital account.
A. In this method partners' capital
accounts are debited with the amounts which were wrongly credited to them.
B The total amount so debited
earlier to the partners is credited to their accounts in profit sharing ratio.
There are two ways of
correcting a mistake after finalization of accounts:
1. Through the Profit & Loss Adjustment A/c.
A In this method whatever amount
has been wrongly given to partners is taken back by debiting partners capital
A/c and crediting Profit and Loss Adjustment A/c.
B In the second step Profit &
Loss Adjustment A/c is debited and partners credited with the amounts which
were actually due to them. In this way no balance is left in the Profit &
Loss Adjustment A/c and rectification is made in partners' capital account.
2. Directly through partners' capital account.
A. In this method partners' capital
accounts are debited with the amounts which were wrongly credited to them.
B The total amount so debited
earlier to the partners is credited to their accounts in profit sharing ratio.
