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easyMCQCUET Accountancy 2025 3 June Shift 22026Accountancy
1 mark

Which of the following is a key feature of the Fixed Capital Method in Partnership Accounts?

  1. A
    Each partner has only one account.
  2. B
    The capital accounts always show a credit balance.
  3. C
    The balance of the capital account fluctuates from year to year.
  4. D
    In the absence of any instruction, the capital account should be prepared by this method.

Solution & Step-by-step Explanation

Under the Fixed Capital Method, capital accounts track only core investments and capital withdrawals, meaning they always reflect a credit balance. Fluctuating scenarios or negative outcomes appear on the separate Partner's Current Account.

Practice this question

Try it yourself before checking the explanation above.

Which of the following is a key feature of the Fixed Capital Method in Partnership Accounts?
A
Each partner has only one account.
B
The capital accounts always show a credit balance.
C
The balance of the capital account fluctuates from year to year.
D
In the absence of any instruction, the capital account should be prepared by this method.

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