Losses are shown in balance sheet which are not written off from profit and loss account. Does it mean that the losses are not deducted from the partners capital account? Explain
Dear Student
The losses shown in the balance sheet are accumulated losses or losses which are not charged to profit and loss account, This loss in balance sheet is ultimately going to be transferred to capital account of partners in case of reconstitution of partnership because partners are the owners of the firm and any type of loss is to be borned by them.
Therefore Losses are deducted from capital account of partners when accounts require us to do so.
Regards
The losses shown in the balance sheet are accumulated losses or losses which are not charged to profit and loss account, This loss in balance sheet is ultimately going to be transferred to capital account of partners in case of reconstitution of partnership because partners are the owners of the firm and any type of loss is to be borned by them.
Therefore Losses are deducted from capital account of partners when accounts require us to do so.
Regards