Distinguish between fixed and fluctuating working capital
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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:
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