Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Partnership

Question:

Which account is credited for the interest on partners' capital by a partnership firm?

Options:

Partners' Capital account

Partner's Current account

Both

Either option 1 or 2

Correct Answer:

Either option 1 or 2

Explanation:

Option 1- Partners' Capital account
Option 2- Partner's Current account
Anyone account is credited depending on the method of maintaining the capital accounts of partners. If fixed capital method is being followed, then current account will be credited and if fluctuating capital method is being followed, then capital account will be credited.