Question

Difference between fixed capital and fluctuating capital account for 2

Answer 1

Fixed Capital---1*. Fixed balance for whole year

2*. No any type of changes occur in this account during accounting year.

3*. current account opened

4* all items like interest on capital, intrest on drawings, profit, salary, commission are recorded in current account.


Fluctuating account - - -

1*. It is that account which is changing anytime in the year.

2*. changes occur in this account

3* Current account not opened

4*. items like intrest on capital, intrest on drawings, share of profit, commission all recorded in this account.


HOPE U UNDERSTAND IT

Answer 2

Answer!!

Difference between fixed capital account and fluctuating capital account:-

→ Two accounts are maintained for each partner, i.e., Fixed Capital Account and Current Account. One account is maintained for each partner in Fluctuating Capital Account.

→ Fixed Capital Account has credit balance whereas Fluctuating Capital Account may have debit or credit balance.

→ Balance in Fixed Capital Account changes when further capital is introduced or capital is withdrawn. Balance in the Fluctuating Capital Account changes with every transaction of the partner with the firm.

→ Transactions related to capital are transferred to Fixed Capital Accounts and others are transferred to Current Account. All transactions are transferred to capital account in case of Fluctuating Capital Account.