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Question
Select the most appropriate alternative from those given below and rewrite the statement.
Under fixed capital method, salary or commission to partner is credited to _______________ account.
Options
partner’s capital
partner’s current
partner’s drawings
partner’s salary
Solution
Under fixed capital method, salary or commission to partner is credited to partner’s current account.
Explanation: Under fixed capital method, any transaction that leads to a change in the capital balance of the partners is recorded in the Partners’ Current Account. This is done so that the capital of the partners remains unaltered. Accordingly, salary or commission to a partner is credited to the respective Partner’s Current Account.
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