Question

197 What are the 2 situations when capited balance fluctuation
unden fixedcapital method?​

Answer 1

Answer:

1. Fixed Capital Method Under the fixed nature of capital, the capital of each partner remains constant from the start of partnership till at the end of it. No adjustments like interest on capital, partner’s salary/commission, Drawings and profit or loss earned during the operation is made At the time of dissolution of the partnership, each partner’s current account balance is transferred to capital A/c. The credit balance of current account will be credited to capital account and debit balance of the current account will be debited to respective partners capital account
2. Fluctuating Capital Method

Under this method as is apparent from the name, capital of each partner goes on changing from time to time. Each partner will have his separate capital account, which will be credited by his initial investment and any additional capital introduced during the year will also be credited to his capital account.

Explanation:

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