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

reason.​

Answer 1

Answer:

No it is not correct because in fixed capital account method only partner capital is shown in capital a/c all other transactions shown in current a/c

Answer 2

Answer:

The account in a partnership firm can be kept in two ways- fixed capital and fluctuating capital.

Under the fixed nature of capital, the capital of each partner remains constant from the start of partnership till at the end of it. No adjustments like interest on capital, partner’s salary/commission, Drawings and profit or loss earned during the operation is made. To have record of all such adjustments each partner’s current account is opened, which is debited with Drawings, share of loss sustained during a period and credit is given for partner’s salary/commission, interest on capital and share of profit earned.

Explanation:

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