Which of the following statement is not true in case of fluctuating capital method under accounting for partnership?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → The capital account balance remains unchanged unless there is an addition to or withdrawal of capital.
Under the fluctuating capital method, each partner has only a capital account, and every item, such as share of profit, interest on capital, drawings and salary, is posted to it. So the balance changes from year to year. A balance that stays the same unless capital is added or withdrawn is the mark of the fixed capital method, where those items go to a separate current account.
Option (1) Each partner has one account i.e. capital account. — A true statement. Only one account, the capital account, is kept for each partner.
Option (2) All adjustments for drawings, salary, interest on capital etc., are posted (transferred) to the capital accounts. — A true statement. With no current account, every adjustment goes straight to the capital account.
Option (4) The capital account may sometimes show a debit balance. — A true statement. Heavy drawings or losses are charged to the same account, so it can go into debit; under the fixed capital method the capital account always shows a credit balance.
NCERT (2026-27 edition):
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