Question

Assertion (A): Fluctuating Capital Account can show debit balance.

Reason (R): Losses and Drawings can be more than Capital Balance.

Options

• Both A and R are correct and R is the correct explanation of A.

• Both A and R are correct but R is not the correct explanation of A.

• A is correct but R is incorrect.

• Both A and R are incorrect.

Answer 1

Both A and R are correct and R is the correct explanation of A.

Explanation:

Assertion and Reason are both true, and the Reason correctly explains the Assertion. A fluctuating capital account can become negative if drawings and losses exceed the partner’s capital, resulting in a debit balance.