Partnership

Accounting

Medium

common

Which of the following statements relates to Fixed Capital Method?

(A) The capitals of the partners shall remain fixed unless additional capital is introduced or capital is withdrawn.

(B) All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in Partner's Current Account.

(C) The partners' capital accounts will always show a debit balance.

(D) The partners' current account may show a debit or a credit balance.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A), (B) and (C) only

(A), (B), (C) and (D)

(B), (C) and (D) only

✅ Correct Option: 1

Under the Fixed Capital Method, partners maintain two accounts: Capital Account and Current Account.

Analyzing each statement:

(A) The capitals of the partners shall remain fixed unless additional capital is introduced or capital is withdrawn.

This is correct. The Capital Account balance remains unchanged throughout the year. Only fresh introduction or permanent withdrawal of capital affects this account.

(B) All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in Partner's Current Account.

This is correct. All adjustments and transactions (profit/loss share, interest on capital, salary, commission, drawings, interest on drawings) are recorded in the Current Account, keeping the Capital Account undisturbed.

(C) The partners' capital accounts will always show a debit balance.

This is incorrect. Partners' Capital Accounts show credit balance as capital is a liability for the partnership firm. Capital contributed by partners is owed back to them.

(D) The partners' current account may show a debit or a credit balance.

This is correct. The Current Account shows:

Credit balance → when share of profit, interest on capital, etc. exceed drawings
Debit balance → when drawings, interest on drawings exceed share of profit, interest on capital, etc.

Statements (A), (B) and (D) are correct regarding Fixed Capital Method.

Correct Answer: Option 1

2026: 21 May Shift 1

Mukesh and Chittudeep are two partners. Mukesh and Chittudeep withdrew ₹ 30,000 each at the beginning of each quarter. Calculate interest on Chittudeep's drawings @10% p.a.

2026: 29 May Shift 1

The Profit or Loss on revaluation of accounts is transferred to:

2026: 13 May Shift 2

Nimrat, Simrat and Harjeet are partners sharing profits and losses in the ratio of 5 : 3 : 2. The partnership deed provides for charging interest on drawings @ 10% p.a. The drawings of Nimrat, Simrat and Harjeet during the year ending March 31, 2025 amounted to Rs. 60,000, Rs. 45,000 and Rs. 30,000 respectively, which were made on 1st April, 2024. After the final accounts have been prepared, it was discovered that interest on drawings has not been taken into consideration. If the necessary adjustment is made for rectification of this error, then:

2025: 3 June Shift 2

Which of the following is the feature of Fixed Capital Method in Partnership Accounts:-

2026: 19 May Shift 1

ABC Ltd. has a partnership deed as per which interest on drawing is to be charged @ 9% p.a and the total interest on drawings of Aman (partner) is calculated to be Rs 1755. Find the monthly amount he withdrew, if drawings are done at the beginning of every month during the year.

2025: 22 May Shift 1

Ram and Laxman started business on 1st Jan 2020 with a capital of Rs 1,20,000 and Rs 80,000 respectively. Ram introduced Rs. 50,000 to the firm on 1st July 2020 as additional capital. If the rate of interest is 15% p.a. Assuming that accounts are closed as per calender year then the Interest payable to Ram on Capital would be:

Solution

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