There are two methods by which the capital accounts of partners can be maintained. Select the main points of differences between the fixed and fluctuating capital methods from the following:
A. Under fixed capital method, the capital of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn, whereas under the fluctuating capital method, capital of the partners fluctuates.
B. Under fixed capital method, all items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in Partners' Current Account, whereas under fluctuating capital method, all the adjustments are recorded directly in the capital accounts of the partners.
C. Under fixed capital method, the partners' capital accounts will always show a credit balance and partners' current account, on the other hand, may show a debit or a credit balance, whereas under the fluctuating capital method, the capital account may sometimes show a debit balance.
D. The partners' capital accounts and current account will always show debit balance, whereas under the fluctuating capital method the capital account will always show a credit balance.
Choose the correct answer from the options given below:
