Which of the following item is added back to the closing capital of the partners to calculate their opening capital?

Drawings during the year

The correct answer is option 1- Drawings during the year.

Drawings during the year is added back to the closing capital of the partners to calculate their opening capital.

Drawings during the year is added back as it reduces the opening capital.

Sometimes opening capitals of partners may not be given. In such a situation before calculation of interest on capital the opening capitals will have to be worked out with the help of partners’ closing capitals by marking necessary adjustments for the additions and withdrawal of capital, drawings, share of profit or loss, if already shown in the capital accounts the partners.

Formula to Find Opening Capital = Closing Capital + Drawings – Additional Capital Introduced + Share of Loss (– Share of Profit)