give the difference b/w fixed and fluctuating capital accounts.
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1. Fixed capital a/c - Under this system, the capital will remain fixed throughout the life of the partnership.
Two type of accounts are made one is capital account and other is current account.
The entries relating to drawings, interest on capital, profit and loss share of partner are made in a separate account for each partner, it is called current account of partners.
When partner brings additional capital or withdraws capital permanently, then capital account is credited or debited respectively.
2. Fluctuating capital a/c - Under this method capital account of partners will not remain fixed rather they will keep fluctuating from time to time.
The entries related to drawings, interest on capital and share of profit and loss of partner are recorded in capital account.
There is no need for current account.
Two type of accounts are made one is capital account and other is current account.
The entries relating to drawings, interest on capital, profit and loss share of partner are made in a separate account for each partner, it is called current account of partners.
When partner brings additional capital or withdraws capital permanently, then capital account is credited or debited respectively.
2. Fluctuating capital a/c - Under this method capital account of partners will not remain fixed rather they will keep fluctuating from time to time.
The entries related to drawings, interest on capital and share of profit and loss of partner are recorded in capital account.
There is no need for current account.
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