Question

Rahul, Samarth and Ayaan were partners sharing profits and losses in the ratio of 5 : 4 : 3. Ayaan’s fixed capital balance as on March 31, 2024 was ₹ 2,70,000. Which of the following items would have affected this capital balance?

Options

• Profit/Loss for the year.

• Additional Capital introduced.

• Reduction in Capital due to Capital Adjustment.

• Both Additional Capital introduced and Reduction in Capital due to Capital Adjustment.

Answer 1

Both Additional Capital introduced and Reduction in Capital due to Capital Adjustment.

Explanation:

In a fixed-capital system, only changes like additional capital introduced or capital adjustments affect the fixed-capital balance. 

• Profits/Losses are recorded in current accounts, not fixed capital.
• Additional capital increases the fixed capital.
• Capital reduction or adjustment lowers the fixed capital.