Identify the correct statement from the given below :-

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.

Under the fixed capital method, the capital account keeps a fixed credit balance, while profits, drawings, interest and salary pass through the current account. If a partner’s share of profit and other credits exceed his drawings, the current account has a credit balance and is a liability of the firm to him; if drawings are larger, it has a debit balance and the partner owes the firm. So the side depends on the balance.

Option (1) Partners' Current Account will never be shown in Assets side of the Balance Sheet. — Incorrect. A debit balance on the current account is shown on the assets side.

Option (3) Partners' Current Account will always be shown in Liabilities side of the Balance Sheet. — Incorrect. Only a credit balance goes to the liabilities side; "always" fails when drawings exceed the credits.

Option (4) Partners' Current Account will always be shown in Assets side of the Balance Sheet. — Incorrect. A current account with a credit balance is a liability, so it cannot always be an asset.