Question

The firm maintains the partner’s capital accounts under the fixed capital

account method. The accountant of firm has credited their salary and

interest on capital to their capital accounts. Is the treatment correct . Give

reasons.​

Answer 1

Explanation:

A partner's opening capital account balance generally equals the value of his contribution to the partnership – (i.e. cash plus the net value of any contributed property). Example: Partner A contributes $100 and a truck with a FMV of $50 to form the AB partnership. decrease a partner's capital account.