Question

Partner's current accounts are opened in case their capital accounts are ___________.

• A. Fixed
• B. Fluctuating
• C. Either A or B
• D. None of these

Answer 1

The correct option is A Fixed

There are two methods of recording profit and loss, interest on capital, interest on drawings, distribution of goodwill etc. in partnership viz. fixed capital method and fluctuating capital method.

In fluctuating capital method, all these things are recorded in partner's capital A/c while in fixed capital method all these things is recorded in partner's current A/c without disturbing partner's capital and at the year end balance of current A/c is transferred to capital A/c