Which of the following is the feature of fluctuating capital:

In the Fluctuating Capital Method, each partner has only one account — the Capital Account. All transactions related to the partner (drawings, interest on capital, interest on drawings, salary, commission, share of profit or loss, etc.) are recorded directly in this capital account.

This causes the balance of the capital account to keep changing (fluctuating) from period to period.

Analysis of other options:

Option 1 describes the Fixed Capital Method, where two accounts are maintained — Capital Account (which remains fixed) and Current Account (which records all adjustments).

Option 3 is incorrect because under fluctuating capital, if a partner's drawings and share of losses exceed the opening capital and profits, the capital account can show a debit balance.

Option 4 also describes the Fixed Capital Method, where capital remains unchanged except for fresh introduction or permanent withdrawal of capital. In fluctuating capital, the balance changes with every transaction (profits, drawings, interest, etc.).