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A, B, C are partners sharing profits & losses equally and A paid liability of Rs.10,000 of the firm, from his private property, then the entry in the books of firm is_________
  • a)
    A’s Capital A/c Dr. 10,000 To Cash A/c 10,000
  • b)
    Liability A/c Dr. 10,000 To A’s Capital A/c 10,000
  • c)
    Liability A/c Dr. 10,000 To Cash A/c 10,000
  • d)
    A’s Capital A/c Dr. 10,000 To Liability A/c 10,000
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
A, B, C are partners sharing profits & losses equally and A paid l...
Entry in the books of the firm for A paying liability of Rs. 10,000 from his private property is as follows:

Liability A/c Dr. 10,000
To A's Capital A/c 10,000

Explanation:

Liability A/c is debited because the liability of the firm has been reduced by Rs.10,000, which was paid by A from his private property. A's Capital A/c is credited because he has contributed to the firm's capital by paying the liability.

This entry will not affect the Cash A/c as the payment was made from A's private property and not from the firm's cash.

Hence, option 'B' is the correct answer.
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Community Answer
A, B, C are partners sharing profits & losses equally and A paid l...
As it will decrease firm's liability at 1 instance and at another it will be transferred to A hence his capital account will be credited
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A, B, C are partners sharing profits & losses equally and A paid liability of Rs.10,000 of the firm, from his private property, then the entry in the books of firm is_________a)A’s Capital A/c Dr. 10,000 To Cash A/c 10,000b)Liability A/c Dr. 10,000 To A’s Capital A/c 10,000c)Liability A/c Dr. 10,000 To Cash A/c 10,000d)A’s Capital A/c Dr. 10,000 To Liability A/c 10,000Correct answer is option 'B'. Can you explain this answer?
Question Description
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