Distinguish between 'Fixed Capital Account' and 'Fluctuating Capital Account' on the basis of credit balance.

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Solution

Basis Fixed Capital Method Fluctuating Capital Method
Credit Balance Under this method, Partners' Capital Account always reveals a credit balance. Under this method, Partners Capital Account may either show a credit balance or a debit balance.

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Under fluctuating capital account, the interest on capital is credited to ___

List the items which may be debited or credited in capital accounts of the partners when

(i) Capitals are fixed

(ii) Capitals are fluctuating

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Basis	Fixed Capital Method	Fluctuating Capital Method
Credit Balance	Under this method, Partners' Capital Account always reveals a credit balance.	Under this method, Partners Capital Account may either show a credit balance or a debit balance.