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easyMCQCUET Accountancy 2025 30 May Shift 22026Accountancy
1 mark

Which of the following is the feature of fluctuating capital?

  1. A
    Under this method, two separate accounts are maintained for each partner, viz., 'capital account' and 'current account'.
  2. B
    Each partner has one account, i.e. capital account under this method
  3. C
    Each partner has one account, i.e. current account under this method
  4. D
    The capital account balance remain unchanged unless there is addition or withdrawal of capital.

Solution & Step-by-step Explanation

Under the Fluctuating Capital Method, all modifications related to drawings, interest, capital contributions, salaries, and profit shares are recorded inside a single consolidated ledger account termed the Partner's Capital Account. This causes the balance to continuously shift or fluctuate from year to year.

Practice this question

Try it yourself before checking the explanation above.

Which of the following is the feature of fluctuating capital?
A
Under this method, two separate accounts are maintained for each partner, viz., 'capital account' and 'current account'.
B
Each partner has one account, i.e. capital account under this method
C
Each partner has one account, i.e. current account under this method
D
The capital account balance remain unchanged unless there is addition or withdrawal of capital.

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