Identify the true statement in respect of the Fixed Capital Method for a Partnership Firm :-
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → The Balance of Partners' Capital Account will be positive/credit.
Under the Fixed Capital Method —
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The Capital Accounts of partners remain constant (fixed) unless additional capital is introduced or withdrawn as per agreement.
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Therefore, the Capital Account generally shows a credit balance, representing the amount invested by each partner.
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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.