Post Utme Babcock University 2022 Accounting Question 16

Practice objective / multiple choice question 16 from the 2022 Post Utme Babcock University Accounting examination.

Post Utme Babcock University 2022 Accounting Objective / Multiple Choice
Question 16 POST_UTME_BABCOCK_UNIVERSITY • 2022 • ACCOUNTING • objective

In a partnership account, the capital of a partner who withdraws cash from the business is reduced by the amount withdrawn. However, if the partner's capital is reduced below the minimum required by the partnership agreement, the deficit is treated as a loan from the partner to the business. What is the correct treatment of the deficit?

Answer Options

Correct Answer A. The deficit is treated as a loan from the partner to the business.
B. The deficit is treated as a loss of the business.
C. The deficit is treated as a reduction in the partner's capital.
D. The deficit is treated as a profit of the business.
Correct Answer
A
Correct Option:
The deficit is treated as a loan from the partner to the business.

About This Question

This is Post Utme Babcock University 2022 Accounting Question 16. It is one of the objective questions from the 2022 Post Utme Babcock University Accounting examination.

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