Give any two points of distinction between fixed capital method and fluctuating capital method?
Answers
There are two ways of maintaining a capital account in a partnership form of business organisation which are 1) Fixed Capital Account and 2) Fluctuating Capital Account.
Fixed capital account is that form of capital account where the business maintains two different accounts which are related to the different kinds of transactions that take place in the capital of the partners. These two accounts are 1) Capital account and 2) Current account
Capital account is related to the basic transactions related to the partners capital whereas the current account is related to all the other capital related transactions like interest on drawings, interest on capital, salary to employees apart from initial investment, addition of new capital and withdrawal of capital.
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