give the difference b/w fixed and fluctuating capital accounts - Accountancy - Accounting for Partnership Basic Concepts

Question

give the difference b/w fixed and fluctuating capital
accounts

antima123.jain... · Accepted Answer

Ans)

Basis of
distinction

Fixed
capital

Fluctuating
capital

1

No Of accounts
maintained

Two accounts are
maintained: fixed capital account and current account

Only one account
(viz capital account) is maintained for each partner

2

Frequency of
change

Balance in fixed
capital account does not change

The balance changes
frequently from period to period

3

Adjustment for
drawings etc

All adjustments for
drawings interest or drawings, interest on capital, salary, share
of profit/loss are made in current account

All adjustments for
drawings, interest on capital, salary, share of profits are made in
capital account

4

Balance

It always shows
credit or positive balance in capital account

Fluctuating capital
account may sometimes show a debit or negative balance

	Basis of distinction	Fixed capital	Fluctuating capital
1.	No. Of accounts maintained	Two accounts are maintained: fixed capital account and current account	Only one account (viz. capital account) is maintained for each partner
2.	Frequency of change	Balance in fixed capital account does not change	The balance changes frequently from period to period
3.	Adjustment for drawings etc.	All adjustments for drawings interest or drawings, interest on capital, salary, share of profit/loss are made in current account	All adjustments for drawings, interest on capital, salary, share of profits are made in capital account
4.	Balance	It always shows credit or positive balance in capital account	Fluctuating capital account may sometimes show a debit or negative balance

give the difference b/w fixed and fluctuating capital accounts.