Under the fluctuating capital method, the share of profit credited to a partner is recorded in the:
APartner's current account only
BPartner's capital account
CPartner's drawings account
DFirm's profit and loss account
Answer & Solution
Correct answer: B. Partner's capital account
1. Under the fluctuating capital method only one account is maintained for each partner.
2. All transactions between the partner and the firm therefore pass through the capital account.
3. It is credited with capital introduced, interest on capital, salary, commission and the share of profit.
4. It is debited with capital withdrawn, drawings, interest on drawings and the share of loss.
5. No current account exists under this method, which is precisely what distinguishes it from the fixed capital method.
_Source: TN HSC Class 12 Accountancy (Samacheer Kalvi, Govt of Tamil Nadu), Unit 3 "Accounts of Partnership Firms - Fundamentals", §3.6.2_
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