Current accounts:

(a) throughout the year the drawings made by the partners are debited to their current account e.g. DR Current A/C, CR Bank when a partner takes money out of the business for his own personal use;

(b) at the end of the financial year, the current account is credited with the partners' income earned, as shown in the profit and loss appropriation A/C;

(c) the current accounts are then balanced off: if a balance is a credit balance when brought down, then this indicates that the partner has not drawn out as much as he has earned. Consequently the worth of the business has increased by the amount of his earnings which he has left in the business. If a balance is a debit balance then the partner has drawn out more than he has earned and reduced the value of the business. LO.1