Choose the correct statement in respect of the Fixed Capital Method for a Partnership Firm:
- AClosing Balance of Partners' Current Account will never be a zero.
- BClosing Balance of Partners' Capital Account may be a debit or may be a credit.
- CClosing Balance of Partners' Capital Account will always be a credit.
- DClosing Balance of Partners' Current Account will never be a credit.
Solution & Step-by-step Explanation
Under the Fixed Capital Method, partners maintain two accounts: Capital Account and Current Account. The Capital Account records only the initial capital introduction and permanent withdrawals/additions. It always maintains a credit balance. The Current Account handles routine transactions (drawings, interest, profits/losses) and can have a debit, credit, or zero balance.