Partners' current accounts are transferred to respective Partners' _____ Accounts.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Capital
At the time of final settlement (dissolution) of a firm, all balances related to partners must be brought together in their Capital Accounts.
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The Current Account balances (whether debit or credit) are transferred to the respective partners’ Capital Accounts to determine the final amount due to or from each partner.
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After this transfer, only Capital Accounts and the Bank Account remain open for final settlement.