CAF-4 · Chapter 12 · Question 6 of 10
Irfan, a partner, buys a shop in his own name. He issues a cheque from the partnership account to pay for it, but debits his own capital account with the purchase price. Is this shop the property of the firm?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) No, because by debiting his own account, he showed the intention of taking the money as a personal loan.
Explanation
Property bought with firm money is usually firm property. However, if a partner debits their own personal capital account for the purchase, it indicates they borrowed the money from the firm, making the property personal.
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