Question

State whether the following statements are True or False.

Partner’s current account is opened when fluctuating capital method is adopted.

Answer 1

False
Explanation: Partner’s Current Account is opened when capital accounts are maintained under fixed capital method. This is because in this method, the capital of the partners remains unaltered. A separate account called current account is opened to record all other transactions (except introduction or withdrawal of capital), such as those relating to salary, commission, interest on capital, etc. Hence, the above statement is incorrect.