State a difference between fixed method and fluctuating method on the basis of balance of partners capital account.

Open in App

Solution

Dear student,

Basis Fixed Capital Fluctuating Capital

No. of Accounts Two different accounts for each partner are maintained. Only one account is maintained.

Balance Capital balance remain unchanged except in case of withdrawal or additional to capital Capital balances of the partners keep on changing. In other words, the capital balances keep fluctuating.

Credit or Debit Balance Partners' Capital Account always reveals a credit balance because all adjustments are made through the Partner's current account. Partners' Capital Account may either show a credit balance or a debit balance because all adjustments are made through the same account.

Regards,

Suggest Corrections

Similar questions

Q. State one difference between Fixed Capital Account and Fluctuating Capital Account of partners.

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

Which of the following is the journal entry for transferring interest on capital to a partner under a fluctuating capital account method?

[2 marks]

Q. shall have an effect on the capital account of partners under the fixed capital method.

Under ___ method, the balance of the capital account fluctuates from year to year.

Join BYJU'S Learning Program

Basis	Fixed Capital	Fluctuating Capital
No. of Accounts	Two different accounts for each partner are maintained.	Only one account is maintained.
Balance	Capital balance remain unchanged except in case of withdrawal or additional to capital	Capital balances of the partners keep on changing. In other words, the capital balances keep fluctuating.
Credit or Debit Balance	Partners' Capital Account always reveals a credit balance because all adjustments are made through the Partner's current account.	Partners' Capital Account may either show a credit balance or a debit balance because all adjustments are made through the same account.