Question

Under fixed capital methods, profit will be credited to:

• A. Capital Account
• B. Drawings
• C. Current capital A/c
• D. Profit & Loss

Answer 1

The correct option is C Current capital A/c

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All such adjustments each partner’s current account is opened,which is debited with Drawings, share of loss sustained during a period and credit is given for partner’s salary/commission, interest on capital and share of profit earned.

After all the adjustments have been made in the current A/c., it is balanced, if it shows debit balance it will be shown in the balance sheet on asset side and if it shows credit balance it will be shown on the liability side.

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