Identify the correct statement from the given below :-

Partners' Current Account will either be shown in Assets side of the Balance Sheet or be shown in Liabilities side of the Balance Sheet.

The correct answer is option 2- Partners' Current Account will either be shown in Assets side of the Balance Sheet or be shown in Liabilities side of the Balance Sheet.

Partners' Current Account will either be shown in Assets side of the Balance Sheet or be shown in Liabilities side of the Balance Sheet is the correct statement. It depends on the debit or credit balance of current account of partner where it is shown.

Fixed Capital Method: Under the fixed capital method, the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners. All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in a separate accounts, called Partner’s Current Account. The partners’ capital accounts will always show a credit balance, which shall remain the same (fixed) year after year unless there is any addition or withdrawal of capital. The partners’ current account on the other hand, may show a debit or a credit balance. Thus under this method, two accounts are maintained for each partner viz., capital account and current account, While the partners’ capital accounts shall always appear on the liabilities side in the balance sheet, the partners’ current account’s balance shall be shown on the liabilities side, if they have credit balance and on the assets side, if they have debit balance.