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Under the Fluctuating Capital Method, the partner's capital account
AStays constant (typical) (typical) (typical) (typical)
BChanges year to year reflecting drawings, share of profit etc.
CIs closed at year end (typical) (typical) (typical)
DIs replaced by a current account (typical) (typical)
Answer & Solution
Correct answer: B. Changes year to year reflecting drawings, share of profit etc.
1. In the Fluctuating Capital Method, all items routed through the capital account.
2. Drawings, interest, salary, share of profit all change the closing balance each year.
3. No separate current account is maintained.
4. Hence (B) describes the method.
_Source: Maharashtra Balbharati Std XII Book-Keeping & Accountancy, Ch 1 "Introduction to Partnership and Partnership Final Accounts", §1.3 ¶§1.3_