Question

Write distinguish between 'fixed capital account' and 'flucluating capital account' (any five differences)

Answer 1

Difference between Fixed and Fluctuating capital a/c :-

• In the fixed capital a/c, two accounts are maintained, but in fluctuating , only one account is maintained.
• Fixed capital - balance does not change except further capital introduced.Fluctuating capital - balance changes with every transaction.
• Transactions relating to capitals are recorded in fixed capital accounts and transactions for drawings, IOD,IOC , salary , commission, share of p&l are recorded in current a/c
• All transactions (fluctuating capital ) , whether for capital , drawings , IOD,IOC, salary, commission, share of p&l are recorded in capital a/c
• Fixed capital- always shows credit balance. Fluctuating capital- shows debit as well as credit balance.

hope it helps..