In partnership accounts, we maintain the capital accounts with two ways. We can either keep fixed capital account and fluctuating capital account. Both are capital accounts but there is small difference of maintaining them.
1. Fixed Capital
When we show partners' opening capital fixed in all the year, we open the capital accounts of partner. Opening and closing balance will be same in it.
we have to open current accounts of partners. All the adjustments like interest on capital, taken drawing and salary adjustments are done in partners' current account
2. Fluctuating Capital
Fluctuating capital fluctuate everytime when any partner withdraw the money or bring fresh capital or doing any other adjustment with his capital. For showing this, we make the capital account of each partner. We do all the adjustment in the capital account. In these adjustments, we can include interest on capital, profit share, drawing and salary. Opening capital balance, Interest on capital, profit share and salary will go to its credit side. Drawing will be credit in this account. Difference of credit and debit side will be the closing balance.
Related : Partnership Deed
1. Fixed Capital
When we show partners' opening capital fixed in all the year, we open the capital accounts of partner. Opening and closing balance will be same in it.
we have to open current accounts of partners. All the adjustments like interest on capital, taken drawing and salary adjustments are done in partners' current account
2. Fluctuating Capital
Fluctuating capital fluctuate everytime when any partner withdraw the money or bring fresh capital or doing any other adjustment with his capital. For showing this, we make the capital account of each partner. We do all the adjustment in the capital account. In these adjustments, we can include interest on capital, profit share, drawing and salary. Opening capital balance, Interest on capital, profit share and salary will go to its credit side. Drawing will be credit in this account. Difference of credit and debit side will be the closing balance.
Related : Partnership Deed
