The following are features of the fluctuating capital method by which capital accounts of partners are maintained:(A) Under the fluctuating capital method, only one account, i.e. capital account is maintained for each partner.(B) All adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings, etc. are recorded directly in the capital accounts of the partners.(C) The capital of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement between the partners.(D) The capital account may sometimes show a debit balance.Choose the correct answer from the options given below:
- A(A), (B) and (C) only
- B(A), (B) and (D) only
- C(A), (B), (C) and (D)
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
Let's analyze the statements:Statement (A) and (B): True. Under the fluctuating capital method, only a single capital account is maintained for each partner, and all standard adjustments go directly into it.Statement (C): False. This is a property of the Fixed Capital Method, not the Fluctuating Capital Method.Statement (D): True. Due to heavy losses or large drawings, a fluctuating capital balance can become negative (debit balance).Therefore, statements (A), (B), and (D) are correct.