Capital Accounts Questions

Under the fixed capital method, the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.

Under the fluctuating capital method, two accounts, i.e., capital account and current account are maintained for each partner.

Under the fixed capital method, while the partners' capital accounts shall always appear on the liabilities side in the balance sheet, the partners' current account's balance shall be shown on the liabilities side if they have a credit balance and on the assets side if they have a debit balance.

Under the fluctuating capital method, only one account, i.e., capital account is maintained for each partner.