Identify the true statement in respect of the Fixed Capital Method for a Partnership Firm :-

The Balance of Partners' Capital Account will be positive/credit.

The correct answer is Option (1) → The Balance of Partners' Capital Account will be positive/credit.

Under the Fixed Capital Method —

• The Capital Accounts of partners remain constant (fixed) unless additional capital is introduced or withdrawn as per agreement.

• Therefore, the Capital Account generally shows a credit balance, representing the amount invested by each partner.

• All adjustments (like drawings, interest on capital, salary, or share of profit/loss) are recorded in a separate Current Account, not in the Capital Account.

Hence, the Capital Account under Fixed Capital Method will always show a positive (credit) balance.