Fundamentals of Partnership

Accountancy (CUET)

Title

45:30

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Indian Economy - Understanding the basics of Indian economic system

If any loan or advance is provided by partner then, balance of such Loan Account should be transferred to :

B/S Assets side

B/S Liability Side

Partner’s Capital A/c

Partner’s Current A/c

- When a partner provides a loan to the partnership, it is treated as a liability on the balance sheet.

- This is because the partnership owes the amount back to the partner.

- Option 2: B/S Liability Side is correct, as the loan represents an obligation of the partnership.

- Option 1: B/S Assets Side would be incorrect because assets represent resources owned by the partnership, not obligations.

- Option 3: Partner’s Capital A/c is used for equity, not debt or loans; hence, it's unsuitable for recording a loan.

- Option 4: Partner’s Current A/c is typically used for ongoing partner transactions, not for recording loans.