Partnership

Accounting

Medium

common

When the capital accounts are fixed, additional capital introduced by the partner is.

Credited to current account.

Debted to current account.

Credited to capital account.

Debited to capital account.

✅ Correct Option: 3

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

Capital Account (remains constant except for permanent changes)
Current Account (records all other transactions)

When additional capital is introduced by a partner, it represents a permanent increase in the partner's capital contribution to the firm. This is treated as an exception to the general rule where routine transactions are recorded in the current account.

Journal Entry:

Bank Account Dr.

To Partner's Capital Account

Since capital is a liability for the partnership firm (the firm owes this amount to the partners), any increase in capital is credited to the Capital Account.

The additional capital introduced directly increases the fixed capital balance and is therefore recorded in the Capital Account itself, not the Current Account. Current Account is used only for adjustments like share of profit/loss, drawings, interest on capital, salary, commission, etc.

Correct Option: 3 (Credited to capital account)

2025: 27 May Shift 2

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(A) The capitals of the partners shall remain fixed unless additional capital is introduced or capital is withdrawn.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

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

Choose the correct answer from the options given below:

2026: 24 May Shift 1

By virtue of section ___________, the Central Government is empowered to prescribe a maximum number of partners in a firm.

2025: 4 June Shift 2

Yadu, Madhu and Vidu are partners, sharing profit and losses in the ratio of 2:2:1. Their fixed capitals on April 01,2018 were:

Yadu Rs. 5,00,000, Madhu Rs. 4,00,000 and Vidu is 3,50,000. As per a partnership deed, partners are entitled to interest on capital of @5% p.a. and Yadu has to be paid a salary of Rs. 2000 per month. The net loss of the firm as per profit and loss account for the year ending March 31, 2019, amounted to Rs. 75,000. On the basis of the profit and loss appropriation account, Partners' distribution of loss would be:

2026: 20 May Shift 1

The Goodwill of a firm is Rs 30,000, when it is valued at three years' purchase of the super profits of the business. Find the normal rate of return, if the firm's capital employed is Rs 5,00,000 and average profits of last five years were Rs 60,000.

2026: 23 May Shift 2

Arun, a partner in a firm, withdraws Rs.1,000 from his capital at the beginning of every month for personal use. What would be the amount of interest on drawings for the whole year given the rate of interest is 9% per annum?

2026: 13 May Shift 1

Aman, Billu and Sonu were partners in a firm sharing profits and losses in the ratio of 2 : 2 : 1. Sonu was guaranteed that her share of profit will not be less than Rs. 25,000. The firm's profit for the year ending on 31st March, 2025 was Rs. 1,00,000. The amount of deficiency to be borne by Aman was:

When the capital accounts are fixed, additional capital introduced by the partner is.

Solution

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