Which of the following statements relates to the Fixed Capital Method?(A) The capitals of the partners shall remain fixed unless additional capital is introduced or capital is withdrawn.(B) All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in Partner's Current Account.(C) The partners' capital accounts will always show a debit balance.(D) The partners' current account may show a debit or a credit balance.Choose the correct answer from the options given below:
- A(A), (B) and (D) only
- B(A), (B) and (C) only
- C(A), (B), (C) and (D)
- D(B), (C) and (D) only
Solution & Step-by-step Explanation
Let's check each statement:(A) is correct; that is the fundamental definition of fixed capital framework tracking.(B) is correct; day-to-day operational adjustments route through the separate Current Account.(C) is false; the core capital accounts always hold a credit balance, never a debit balance.(D) is correct; depending on whether a partner's earnings exceed or fall short of their drawings, the current account can show either a debit or credit balance.Thus, statements (A), (B), and (D) only are correct.