Question

Distinguish between fixed capital account and fluctuating capital account on the basis of credit balance .

Answer 1

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.

4. Appearance in the balance sheet

Both capital and current accounts appear.

Only capital account appears .

5. Specific mention

It should be specifically mentioned in the partnership deed.

Not necessary.

6. Credit / Debit balance

Fixed capital accounts always shows a credit balance.

Fluctuating capital may some times show a debit balance.

Answer 2

Answer:

The difference between fixed capital account and fluctuating capital account on the basis of credit :

Explanation:

In a partnership form of business, there are two ways to maintain a capital account:

1. Fixed Capital Account and
2. Fluctuating Capital Account

A fixed capital account is a type of capital account in which the company keeps track of two separate accounts for the various transactions that affect the partners' capital. Capital account and current account are these two accounts.

The current account can be related to all other capital-related transactions, such as interest on capital, salary to employees in addition to the initial investment, addition of new capital, and withdrawal of capital, whereas the capital account is related to such basic transactions involving the partners' capital.

Fluctuating refers to something that is unstable or constantly changing. The changing capital account is comparable in this regard. The partners' capital continues to fluctuate under the fluctuating capital account.

Each of the firm's partners will have a separate capital account, and their capital accounts will be credited with both their initial capital investment and any subsequent capital investments they make during the accounting period.

this is the difference between fixed capital account and fluctuating capital account.