The following are the features of the fluctuating capital method by which the capital accounts of partners can be maintained.

(A) Under the fluctuating capital method, only one account, i.e. capital account is maintained for each partner.

(B) All the adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings, etc. are recorded directly in the capital accounts of the partners.

(C) the capital of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement between the partners.

(D) The capital account may sometimes show a debit balance.

Choose the correct answer from the options given below:

Under the Fluctuating Capital Method, partners maintain only one account (Capital Account) where all transactions affecting capital are recorded directly.

Let's examine each statement:

Statement (A): Only one account (capital account) is maintained for each partner.

This is correct. Unlike the Fixed Capital Method where both Capital and Current accounts are maintained, the Fluctuating Capital Method uses only the Capital Account.

Statement (B): All adjustments (share of profit/loss, interest on capital, drawings, interest on drawings) are recorded directly in capital accounts.

This is correct. Since no separate current account exists, all transactions that affect a partner's equity are recorded in the Capital Account itself, causing it to fluctuate.

Statement (C): Capital remains fixed unless additional capital is introduced or withdrawn.

This is incorrect. This describes the Fixed Capital Method, not the Fluctuating Capital Method. In Fluctuating Capital Method, capital changes continuously with every adjustment like profit distribution, drawings, interest on capital, etc.

Statement (D): Capital account may sometimes show a debit balance.

This is correct. If a partner's drawings and charges exceed their share of profits and capital balance, the Capital Account can show a debit balance (similar to an overdraft situation).

Therefore, statements (A), (B), and (D) are correct features of the Fluctuating Capital Method.

Correct Answer: Option 2