Partnership

Accounting

Easy

common

Which statement is not true about Capital Accounts of Partner-

Under the fixed capital method, the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.

Under the fluctuating capital method, two account, i.e. capital account and current account is maintained for each partner.

Under the fixed capital method, While the partners' capital accounts shall always appear on the liabilities side in the balance sheet, the partners' current account's balance shall be shown on the liabilities side, if they have credit balance and on the assets side, if they have debit balance.

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

✅ Correct Option: 2

The statement that is not true is Statement 2.

Under the Fluctuating Capital Method, only one account (Capital Account) is maintained for each partner. All transactions like interest on capital, drawings, salary, commission, share of profit/loss etc. are directly recorded in the Capital Account itself, causing the capital to fluctuate.

Under the Fixed Capital Method, two accounts are maintained:

Capital Account (remains fixed)
Current Account (records all adjustments)

Statement 2 incorrectly states that two accounts are maintained under the fluctuating capital method, which is actually the feature of the fixed capital method.

Let's verify the other statements:

Statement 1 is correct - Under fixed capital method, capital remains unchanged unless there is additional introduction or permanent withdrawal as per agreement.

Statement 3 is correct - Under fixed capital method, Capital Account always appears on liabilities side (credit balance), while Current Account appears on liabilities side if credit balance or assets side if debit balance.

Statement 4 is correct - Under fluctuating capital method, only Capital Account is maintained.

The answer is Option 2.

2026: 13 May Shift 2

The books of a business showed that the firm's capital employed is Rs. 2,50,000 and the profits for the last five years were: 2021–Rs. 20,000; 2022-Rs. 25,000; 2023-Rs. 27,500; 2024- Rs.35,000 and 2025-Rs. 42,500. What will be the value of Super Profit, when the goodwill valuation is done on the basis of 3 years' purchase of super profits of the business, given that the normal rate of return is 10%.

2025: 13 May Shift 2

In the case of fixed capital method, following two accounts are maintained.

2025: 29 May Shift 2

A and B are partners, sharing profits equally. Their fixed capitals were Rs 2,00,000 and Rs 3,00,000 respectively. Interest on capital as provided under partnership deed @10% p.a was omitted. Select the correct option from the following:

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

2026: 20 May Shift 1

The capital of the firm of M and N is Rs. 1,00,000 and the market rate of interest is 15%. The annual salary to partners is Rs. 6,000 each. The profits for the last 3 years were Rs. 30,000 (for 2022); Rs. 36,000 (for 2023) and Rs. 42,000 (for 2024). Goodwill is to be valued at 2 years' purchase of the last 3 years' average super profits or 3 years' purchase of the last 2 years' average super profits, whichever is less. Calculate the goodwill of the firm.

2025: 13 May Shift 1

The total amount of interest on drawings will be:

Which statement is not true about Capital Accounts of Partner-

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