CBSE 2025, Set 2

Question

There are two statements Assertion (A) and Reason (R):
**Assertion (A):** The partners' fixed capital accounts always show a credit balance, which shall remain the same (fixed) year after year unless there is any addition or withdrawal of capital.
**Reason (R):** When capitals are fixed, then various items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in partners' capital accounts.

Choose the correct option from the following A). Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). B). Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A). C). Assertion (A) is correct, but Reason (R) is incorrect. D). Assertion (A) is incorrect, but Reason (R) is correct.

Edvaya · Accepted Answer

The correct answer is Assertion (A) is correct, but Reason (R) is incorrect.. (C) Assertion (A) is correct, but Reason (R) is incorrect. **Explanation:** Reason (R) is incorrect because when capitals are fixed, items like profit/loss, interest, and drawings are recorded in the Partners' **Current Accounts**, not Capital Accounts.

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Accountancy > Accounting For Partnership Firms > Fundamentals Of Partnership

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