Accounting Help- Partnership Accounts Watch

Alexis1729
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#1
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If a partner pays for office stationery using their personal funds, you debit the stationery account and credit their current account. Then why is it that when a partner introduces a motor vehicle, you debit the motor vehicle account by credit their capital account, rather than crediting their current account?

Could someone please explain this to me and in general, what transactions affect the capital and current account?
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aliman65
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(Original post by Alexis1729)
If a partner pays for office stationery using their personal funds, you debit the stationery account and credit their current account. Then why is it that when a partner introduces a motor vehicle, you debit the motor vehicle account by credit their capital account, rather than crediting their current account?

Could someone please explain this to me and in general, what transactions affect the capital and current account?
Pretty sure the current account is removed at the end of the reporting period and transferred to the capital account, so it doesn't really make any difference.

Been ages since I did partnerships in accounting though so can't remember it very well.
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Alexis1729
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(Original post by aliman65)
Pretty sure the current account is removed at the end of the reporting period and transferred to the capital account, so it doesn't really make any difference.

Been ages since I did partnerships in accounting though so can't remember it very well.
The mark scheme insists that you credit the capital account.
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210555
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(Original post by Alexis1729)
The mark scheme insists that you credit the capital account.
Stationery is day to day revenue expenditure, hence the current account is credited.
Motor cars are fixed asset\ non current asset and is viewed as long term capital investment in the business, hence the capital account.

Rule of thumb
Debit expense ( profit and loss) credit current account
Debit fixed asset (financial position\ balance sheet) credit capital account.

Be careful though, if inventory is purchased this is still day to day revenue expenditure so the credit will be in the current account. Hope this helps😀
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aliman65
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(Original post by Alexis1729)
The mark scheme insists that you credit the capital account.
The person above me explains the reason pretty nicely. I did think it was something to do with current and non current items; just couldn't remember and didn't want to give you the wrong idea.
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Alexis1729
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(Original post by 210555)
Stationery is day to day revenue expenditure, hence the current account is credited.
Motor cars are fixed asset\ non current asset and is viewed as long term capital investment in the business, hence the capital account.

Rule of thumb
Debit expense ( profit and loss) credit current account
Debit fixed asset (financial position\ balance sheet) credit capital account.

Be careful though, if inventory is purchased this is still day to day revenue expenditure so the credit will be in the current account. Hope this helps😀
Thank you for explaining it so clearly. You are much better than my teacher!
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210555
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(Original post by Alexis1729)
Thank you for explaining it so clearly. You are much better than my teacher!
Anytime, parent is an Accountant so anytime 😀
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