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Solvency Ratios

State whether...

Question

State whether the following statements are True or False.

Debit balance of insolvent Partner’s Capital A/c is known as Capital Deficiency.

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Solution

True

Explanation: Debit balance of an insolvent partner’s capital account is known as capital deficiency. This deficiency is to be borne by all the solvent partners in their profit sharing ratio.

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