Question

Under the fluctuating capital method, which of the following account is maintained for each partner.

Options

• Capital account

• Current account

• Both the Capital account and Current account

• None of these

Answer 1

Capital account

Explanation:

Each partner has only one account, the capital account, under the fluctuating capital technique. All adjustments are recorded immediately in the capital accounts of the partners, such as share of profit and loss, interest on capital, drawings, interest on drawings, salary or commission to partners, and so on.