Answer to Question #206334 in Accounting for qianhe

Question

 Explain what debit balance on the capital account indicate and

the action need to be taken to resolve upon winding up a partnership.

Answer 1

A debit to a capital account indicates that the firm owes less to its owners (i.e. lowers the capital), whereas a credit to a capital account indicates that the business owes more to its owners (i.e. raises the capital).