Partnership

Accounting

Easy

common

Choose the correct statement in respect of the Fixed Capital Method for a Partnership Firm :-

Closing Balance of Partners' Current Account will never be a zero.

Closing Balance of Partners' Capital Account may be a debit or may be a credit.

Closing Balance of Partners' Capital Account will always be a credit.

Closing Balance of Partners' Current Account will never be a credit.

✅ Correct Option: 3

Under the Fixed Capital Method, two accounts are maintained for each partner:

Capital Account - Records only permanent transactions like initial capital introduced, additional capital, and permanent withdrawals
Current Account - Records all other transactions like profit/loss share, drawings, interest on capital, salary, commission, interest on drawings, etc.

The key characteristic of the Fixed Capital Method is that the Capital Account balance remains fixed (unchanged except for fresh capital or permanent withdrawals) and always shows a credit balance because:

Capital is a liability for the business
Partners are creditors to the firm for their capital contribution
The account can only decrease due to permanent capital withdrawal, but never turn into a debit balance

The Current Account, on the other hand, is fluctuating and can have either:

Credit balance → when credits (profit share, interest on capital, salary) exceed debits (drawings, interest on drawings, loss share)
Debit balance → when debits exceed credits
Zero balance → when debits equal credits

Therefore, Option 3 is correct: "Closing Balance of Partners' Capital Account will always be a credit."

2025: 26 May Shift 2

The clauses of a partnership deed can be altered with the consent of ______

2026: 13 May Shift 2

Out of the following statements, which are correct?

(A) In the absence of partnership deed, no partner is entitled to get salary or other remuneration.

(B) If a partner withdraws fixed amount at the end of each month for the whole year, then interest on drawings will be calculated for an average period of 5.5 months.

(C) If the partnership deed provides for interest on capital but the firm does not have sufficient profit, then the interest on capital will be paid to the extent of availble profit in the ratio of interest on capital.

(D) If a partner is admitted into a firm with a guarantee of certain profit, then the deficiency of profit (if any) shall be borne by the old partners in their capital ratio.

2026: 6 June Shift 1

Select the appropriate ratio for the following events. Match List-I with List-II

List-I (Events)	List-II (Ratio)
(A) General Reserve	(I) Gaining Ratio
(B) Retirement of a partner	(II) Old Profit Sharing Ratio
(C) Admission of a partner	(III) New Profit Sharing Ratio
(D) Adjustment of Capitals at the time of Admission	(IV) Sacrificing Ratio

Choose the correct answer from the options given below:

2026: 31 May Shift 1

Which of the following is not a feature of partnership ?

2025: 15 May Shift 2

Net loss of the firm as per profit and loss account for the year ending March 31, 2024 amounted to Rs. 75,000. Yaduvanshi, Madhulika and Vidushi are partners, sharing profits and losses in the ratio of 2:2:1. Their fixed capitals on April 01, 2019 were: Yaduvanshi Rs. 5,00,000, Madhulika Rs. 4,00,000 and Vidushi Rs. 3,50,000. On the basis of the above information, pass the necessary journal entry

2022: 15 July Shift 2

When the fixed amount is withdrawn at the end of each quarter, interest on drawing will be calculated for _______

Choose the correct statement in respect of the Fixed Capital Method for a Partnership Firm :-

Solution

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