Question

The capital account of a partner may be a ______________.

• A. Fixed Capital A/c
• B. Fluctuating Capital A/c
• C. A or B
• D. None of the above

Answer 1

The correct option is C A or B

Accounting of partnership is done either on fixed capital system basis or fluctuating capital system basis. Fixed system states that the capital invested in the beginning would remain same throughout, so to follow this statement a fixed capital account is prepared to record entry related to introduction or withdrawal of capital.

Fluctuating system states that capitals of partners can later as per the transactions carried out by them. For this fluctuating capital account of partners is prepared to record the fluctuations in capital.

Thus, a fluctuating and a fixed capital system is prepared for partnership accounting.