Question

For adjustment _______________, a statement of accounts to ascertain the net effect of omission on partner's capital accounts is to be worked out at first.

• A. Through profit and loss adjustment account
• B. Profit and loss account
• C. Directly in partner's capital accounts
• D. Both a and b

Answer 1

The correct option is C Directly in partner's capital accounts

partner's capital account is prepared separately one of the items of omissions, then first ascertain the partners' capital at the beginning. The adjustment can also be made directly in the Partners' Capital Accounts without shall prepare a statement to find out the net effect of omissions and commissions.