Post Utme Pan Atlantic University 2018 Accounting Question 1

Practice objective / multiple choice question 1 from the 2018 Post Utme Pan Atlantic University Accounting examination.

Post Utme Pan Atlantic University 2018 Accounting Objective / Multiple Choice
Question 1 POST_UTME_PAN-ATLANTIC_UNIVERSITY • 2018 • 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In a partnership account, the capital of a partner who withdraws cash from the business is reduced by the amount withdrawn.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 capital required by the partnership agreement, the deficiency is treated as a loan from the partner to the business. What is the correct treatment of the partner's capital when the partner withdraws cash from the business?

Answer Options

A. The partner's capital is reduced by the amount withdrawn.
B. The partner's capital is not reduced by the amount withdrawn.
Correct Answer C. The partner's capital is reduced by the amount withdrawn, but the deficiency is treated as a loan from the partner to the business.
D. The partner's capital is not affected by the withdrawal.
Correct Answer
C
Correct Option:
The partner's capital is reduced by the amount withdrawn, but the deficiency is treated as a loan from the partner to the business.

About This Question

This is Post Utme Pan Atlantic University 2018 Accounting Question 1. It is one of the objective questions from the 2018 Post Utme Pan Atlantic University Accounting examination.

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