state the two methord óf maintaining capital açcount of partner
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Answer:
Capital accounts of partners of a firm may be maintained by following two methods: (i) Fixed capital method and (ii) Fluctuating capital method. Amount invested by partners in the partnership business is called partners' capital. Capital may be contributed by a partner in cash or in the form of assets, etc.
Explanation:
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There are two methods of maintaining capital Accounts.
There are two methods of maintaining capital Accounts. 1. Fixed Capital Method:- In this method two accounts of each partner are maintained i.e Capital and Current Account. Balance in Capital Account remains the same except when new capital is introduced or withdrawn. All adjustments like profit,loss,interest on capital,drawings,salary,commission etc are made through current account. The capital account will always have a credit balance while current account may have a debit and credit balance.
There are two methods of maintaining capital Accounts. 1. Fixed Capital Method:- In this method two accounts of each partner are maintained i.e Capital and Current Account. Balance in Capital Account remains the same except when new capital is introduced or withdrawn. All adjustments like profit,loss,interest on capital,drawings,salary,commission etc are made through current account. The capital account will always have a credit balance while current account may have a debit and credit balance.2. Fluctuating Capital Method:- In this method, only one account is maintained i.e Capital Account. The balance in capital account changes every year because of all adjustments like profits/losses,drawings,interest,salary etc. Fluctuating capital account may sometimes show a debit balance.