In the Proforma of Partner's Capital Account under the Fluctuating capital Method, the Credit side includes the following items:
(A) Balance b/d (in case of credit opening balance)
(B) Salaries
(C) Interest on drawings
(D) Profit and Loss Appropriation (for share of profit)
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (B) and (D) only
In the Fluctuating Capital Method, the credit side of Partner’s Capital Account includes:
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(A) Balance b/d (credit opening balance) → opening capital balance.
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(B) Salaries/Commission to partners → added to capital.
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(D) Profit & Loss Appropriation (share of profit, interest on capital, reserve distribution, etc.) → added to capital.
(C) Interest on drawings → is a charge against the partner, so it is recorded on the debit side, not credit side.