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Under the fixed capital method, the capital of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement between the partners. Which among the following is NOT the feature of the fixed capital method? |
The partners' capital accounts will always show a credit balance. All adjustments for drawings, salary, interest on capital, etc., are posted in the current accounts. Under this method, two capital accounts are maintained for each partner. The partners' current account may show a debit or a credit balance. |
Under this method, two capital accounts are maintained for each partner. |
The correct answer is Option (3) → Under this method, two capital accounts are maintained for each partner. |
