Investment in partnership firm

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Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2016 A person is proprietor of a firm and also a partner in other firm. What is the treatment of Capital invested by him to partnership firm from proprietary firm while preparing balance sheet of Proprietary firm? Whether it is shown under capital account of proprietary firm or to be shown under Investment. Please advice

Rupesh Jain

Rupesh Jain (Expert)

25 May 2016 its show as investment in partner firm m/s................ in prop. business Balance sheet. if dont want to show in balance sheet then you can debit the capital a/c in prop business.

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Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2016 Thanks for prompt reply sir. which is option is best according to you sir??

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2016 I have have one more query sir, In FY 2015-16 partner capital account is negative, Can investment account can be show negative balance?? Please advice

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2016 I have have one more query sir, In FY 2015-16 partner capital account is negative, Can investment account can be show negative balance?? Please advice

CA Pracheta Shirish Deshmukh

CA Pracheta Shirish Deshmukh (Expert)

28 May 2016 The investment account cannot be negative. I think you have mixed up Capital and Current Account of Partnership Firm. The capital account should be shown in investment and Current Account under Current Assets( if +ve)

CA Pracheta Shirish Deshmukh

CA Pracheta Shirish Deshmukh (Expert)

28 May 2016 or Current Liabilities ( if -ve)

Querist : Anonymous

Querist : Anonymous (Querist)

01 June 2016 Capital account in firm is negative because of withdrawal made by partners, which is more than capital introduced.

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