A, B and C are in partnership business. A used ₹2,00,000 belonging to the firm without the informationto other partners and made a profit of ₹35,000 by using this amount. Which decision should be takenby the firm to rectify this situation?a) A need to return only ₹2,00,000 to the firm.b) A is required to return ₹35,000 to the firm.c) A is required to pay back ₹35,000 only equally to B and C.d) A need to return ₹2,35,000 to the firm.
Question
A, B and C are in partnership business. A used ₹2,00,000 belonging to the firm without the informationto other partners and made a profit of ₹35,000 by using this amount. Which decision should be takenby the firm to rectify this situation?a) A need to return only ₹2,00,000 to the firm.b) A is required to return ₹35,000 to the firm.c) A is required to pay back ₹35,000 only equally to B and C.d) A need to return ₹2,35,000 to the firm.
Solution
The correct decision to rectify this situation would be option (d) "A need to return ₹2,35,000 to the firm."
Here's why:
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A took ₹2,00,000 from the firm without informing the other partners. This is a breach of trust and partnership agreement. Therefore, A is obligated to return this amount to the firm.
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A made a profit of ₹35,000 using the firm's money. Since this profit was made using the firm's resources, it belongs to the firm and not to A individually. Therefore, A should return this profit to the firm as well.
So, the total amount that A needs to return to the firm is the original amount taken (₹2,00,000) plus the profit made (₹35,000), which equals ₹2,35,000.
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