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Ratios and OMO

State whether...

Question

State whether the following statements are True or False.

A Solvent partner having debit balance to his Capital Account does not share the deficiency of Insolvent Partner’s Capital Account.

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Solution

True

Explanation: A solvent partner who has a debit balance does not share deficiency of an insolvent partner, even though he or she may be more financially sound compared to the other solvent partners. This is because it violates the principle of natural justice and equity.

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