Accountancy Part AAccounting for Partnership

If the capital of partners is fixed, then the salary provided to the…

If the capital of partners is fixed, then the salary provided to the partner is posted in which of the following account?

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Current Account

Under the fixed capital method, each partner has two accounts. The capital account shows only the capital he has brought in, and it changes only when capital is added or withdrawn by agreement. Every other item of the year, such as his share of profit, interest on capital, salary, commission, drawings and interest on drawings, is recorded in his current account.

That is why the capital account keeps the same credit balance year after year, while the current account may show a debit or a credit balance.

NCERT (2026-27 edition):
Maintenance of Capital Accounts of Partners – “… (a) Fixed Capital Method: Under the fixed capital method, the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners. All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in a separate accounts, called Partner’s Current Account.”