Practicing Success
Read the passage given below and answer the question: Teesha and Ritik are partners in a firm without any agreement. Due to lack of agreement they realised that there was contradiction between them on one issue or the other so they decided to enter into a written agreement with regard to different terms and conditions. As per the agreement they will be sharing profits in the ratio of 3 : 2. At the beginning of 2022-2023 i.e. 1st April 2022 their capital were ₹60,000 and ₹40,000 respectively. They earn a profit of 30,000 for the year ending 31st March 2023. According to agreement, both Teesha and Ritik are entitled to ₹1,000 per month as salary and 5% p.a interest on their capital. They are also to be charged an interest of 5% p.a on their drawings, which was 12,000 for Teesha and ₹8,000 for Ritik for the year 2022-2023. |
Identify the account in which salary of Teesha will be transferred, when capitals are fixed. |
Profit and loss account Realisation account Capital account Current account |
Current account |
The correct answer is Option (4) → Current account When capitals are fixed in a partnership, the salary of a partner is transferred to the "Current Account" of that partner. The Current Account is a temporary account that records various transactions such as drawings, salaries, and other personal transactions of the partners. |