X, Y and Z are partners sharing profit and loss equally. Their capital balances on 31th March 2012 are Rs. 80,000, Rs. 60,000 and Rs. 40,000, respectively. Their personal assets are worth as follows: X – Rs. 20,000, Y – Rs. 15,000 and Z – Rs. 10,000. The extent of their liability in the firm would be

The correct answer is B. X – Rs. 20,000, Y – Rs. 15,000, Z – Rs. 10,000.

The extent of a partner’s liability in a partnership is limited to the amount of their capital contribution. In this case, X, Y, and Z have capital balances of Rs. 80,000, Rs. 60,000, and Rs. 40,000, respectively. Therefore, their personal assets are not at risk in the event of the partnership’s insolvency.

Option A is incorrect because it states that X, Y, and Z’s capital balances are Rs. 80,000, Rs. 60,000, and Rs. 40,000, respectively. However, their personal assets are worth Rs. 20,000, Rs. 15,000, and Rs. 10,000, respectively. Therefore, their capital balances are not equal to their personal assets.

Option C is incorrect because it states that X, Y, and Z’s liability in the firm is Rs. 1,00,000, Rs. 75,000, and Rs. 50,000, respectively. However, their capital balances are only Rs. 80,000, Rs. 60,000, and Rs. 40,000, respectively. Therefore, their liability in the firm cannot be more than their capital balances.

Option D is incorrect because it states that X, Y, and Z’s liability in the firm is equal. However, their capital balances are not equal. Therefore, their liability in the firm cannot be equal.