Partners current accounts are opened when their capital accounts are ___________ .

Fixed

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Fluctuating

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Semi permanent

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None of these

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Solution

The correct option is C Fixed
There are two types of methods to account for partners' capitals in case of partnership, viz, Fixed Capital and Fluctuating Capital.
In case of fixed capital method, current accounts are opened to record for all adjustments like salary, commission, interest on capital, loans and drawings etc.
Partners' capital account shows a fixed balance year after year. In cases of the introduction of further capital and withdrawal of capital, the fixed capital accounts are altered.

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