Doubt

Shankari C

Partners ' capital account Dr. To investment

Thread Starter

Thank you. Can you explain why is investment credited and why partner's capital A/c debited

Dharani Chakravarthi

Investment is an asset(real ac) to the firm, and so it shows debit balance. When it is taken over by partner it will be credited as per golden rules - credit what goes out. When partner takes over the investment it is a form of drawing/settlement by way of investment(usually done with cash or loan ac). When a partner makes any drawing his capital ac will be debited/ When settlement is made to a partner his capital ac will be debited too.