Question

When the partners' capitals are fixed, where will the drawings made by a partner be recorded?

Answer 1

In case of Fixed Capital method, two accounts are opened for recording the transactions.

1. Capital Account which records the introduction of capital. It remains fixed year after year otherwise than where there is an introduction of new capital and withdrawal of capital.

2. Current Account which records all other adjustments like salary, commission, interest on capital,drawings etc.

So, when the partner's capital are fixed,drawings made by a partner will be recorded in the current account debit side.