The correct answer is: B. Loan advanced by a partner to the firm
A partner’s capital account is a record of the partner’s investment in the partnership. The account is increased by the partner’s initial investment, any additional investments made by the partner, and the partner’s share of the partnership’s profits. The account is decreased by the partner’s withdrawals from the partnership, the partner’s share of the partnership’s losses, and any loans made by the partner to the partnership.
When a partner advances a loan to the partnership, the loan is recorded as a credit to the partner’s capital account. This is because the loan increases the partner’s investment in the partnership. The loan will be repaid to the partner with interest, which will also be recorded as a credit to the partner’s capital account.
The other options are incorrect because they are not considered to be investments in the partnership. Interest on drawings is a payment made to a partner for the use of their capital. A partner’s share in the firm’s loss is a reduction in the partner’s capital account. Salary to the active partners is a payment made to the partners for their services to the partnership.
I hope this explanation is helpful. Please let me know if you have any other questions.