Question

Distinguish between fixed and fluctuating working capital

Answer 1

Answer:Points

Fixed Capital Method

Fluctuating Capital Method

1.Number of Accounts

Two accounts, viz., capital and current account.

One account, viz., capital account.

2. Nature of Account / Balance

Remains unaltered

Fluctuates.

3. Adjustments

Adjustments like interest on capital, drawings, interest on drawings, etc. are made in the current accounts.

Adjustments are made in the capital account itself.

Explanation: