While adjusting the capital accounts of partners excess cash is withdrawn and deficit is added. This adjustment should be done by current accounts of the partners or by cash?

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Solution

Dear Student,

Generally, the adjustment for excess (or deficit) cash is done through Cash/Bank A/c. However, if the question specifies that the adjustment is to be done through the partners' current accounts, in that case we write partner's current account on the debit (or credit) side as the case may be.

Hope, this clarifies your doubt.

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