Which of the following is the feature of fluctuating capital:
- AUnder this method, two separate accounts are maintained for each partner, viz., 'capital account' and 'current account.'
- BEach partner has one account, i.e. capital account under this method
- CThe capital accounts always show a credit balance
- DThe capital account balance remain unchanged unless there is addition or withdrawal of capital.
Solution & Step-by-step Explanation
Under the fluctuating capital method, only one single ledger account—the Partner's Capital Account—is created for each member. All adjustments, additions, profits, losses, and drawings are channeled directly through this single account, causing its closing balance to constantly change or fluctuate year-on-year.