Under fluctuation method of capital, what is the treatment of "interest on capital"?

Credited to capital account

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Debited capital account

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No treatment or adjustment is needed

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Credited to current account

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Solution

The correct option is A Credited to capital account
Fluctuation method states that only a single partners' capital account will be prepared to record an entry.
Interest on capital the amount to be received by partners for investing their capitals in business and is a type of income for the partners.
All the incomes are credited to capital account of partners and thus interest on capital will be credited to partners' capital account.

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