The correct answer is Option (1) → (A), (B) and (D) only
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(A) The capitals of the partners shall remain fixed unless additional capital is introduced or capital is withdrawn. This is the defining feature of the Fixed Capital Method. Changes to the Capital Account only occur due to permanent injections or permanent withdrawals of capital. (Correct)
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(B) All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in Partner's Current Account. All routine transactions affecting a partner's claim on the firm, except those in statement (A), are recorded in the separate Partner's Current Account. (Correct)
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(C) The partners' capital accounts will always show a debit balance. This is incorrect. Since the capital account is only debited for permanent withdrawals (which rarely exceed the initial contribution), the Capital Account will always show a credit (positive) balance.
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(D) The partners' current account may show a debit or a credit balance. This is correct. The Current Account records profits, interest on capital (credits) and losses, drawings, and interest on drawings (debits). Depending on the relative size of these items, the balance can fluctuate to be a debit (negative) or a credit (positive). (Correct)
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