Negative balance partners capital show in balance sheet

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When a partner withdraws more than their capital contribution, their capital account can show a negative balance. This can be presented on the balance sheet in two ways: either on the asset side as a debit balance, or on the liability side with a minus sign. The latter is often preferred for consistency with tax return formats.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)
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25 October 2021 Sir,
A partnership firm cash withdrawal some amount one of the partner after negative balance show in partner capital account.
Question:
Negative balance Amount partner capital account show procedure in balance sheet.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 October 2021 Transfer the debit balance to partner's loan account.

CA Raj Doshi

CA Raj Doshi (Expert)
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02 November 2021 It is a matter of presentation. option 1 - Capital account debit balance can be shown on asset side. option 2- Also,can be shown on liability side with minus sign. I prefer option 2 which is in line with Balance sheet format in ITR

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