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Home Questions JREDNK3M7P
Target Exam

CUET

Subject

Accountancy

Chapter

Reconstitution of Partnership Firm: Retirement and Death

Question:

When closing the Profit and Loss Suspense Account by transferring the amount to the gaining partners' capital accounts, the journal entry is:

Options:

Gaining Partners Capital A/c Dr. (in gaining ratio)
       To Profit & Loss Suspense A/c
(P & L Suspense A/c is closed)

Gaining Partners Capital A/c Dr.
      To Retiring Partners Capital A/c
(P & L Suspense A/c is closed)

Retiring Partners Capital A/c Dr.
       To Gaining Partners Capital A/c (in gaining ratio)
(P & L Suspense A/c is closed)

Profit & Loss Suspense A/c Dr.
          To Gaining Partners Capital A/c (in gaining ratio
(P & L Suspense A/c is closed)

Correct Answer:

Gaining Partners Capital A/c Dr. (in gaining ratio)
       To Profit & Loss Suspense A/c
(P & L Suspense A/c is closed)

Explanation:

The journal entry to close the Profit and Loss Suspense Account by transferring the amount to the gaining partners' capital accounts is option A. It involves debiting the Gaining Partners Capital Account in their gaining ratio and crediting the Profit & Loss Suspense Account.

CUET Questions