Accountancy Part AAccounting for Partnership

When Capital accounts of partners are maintained on the basis of fixe…

When Capital accounts of partners are maintained on the basis of fixed capital method, interest on drawings will be :-

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Debited to Partner's Current Account

Under the fixed capital method each partner has two accounts, and every item other than capital itself goes to the current account. Interest on drawings is a charge on the partner, so it is a debit there.

Why the other options are incorrect

Option (1) Debited to Partner's Capital Account — Incorrect. The capital account stays fixed under this method; it changes only when capital is added or withdrawn.
Option (2) Credited to Partner's Current Account — Incorrect. A credit would add to what the firm owes the partner, but interest on drawings is charged to him.
Option (4) Credited to Partner's Capital Account — Incorrect. It is the wrong account and the wrong side: the capital account is not used, and the charge is a debit.

NCERT (2026-27 edition):
Maintenance of Capital Accounts of Partners – “… (a) 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the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.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.”

When Capital accounts of partners are maintained on the basis of fixed capital method, interest on drawings will be :-

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Debited to Partner's Current Account

Why the other options are incorrect

Option (1) Debited to Partner's Capital Account — Incorrect. The capital account stays fixed under this method; it changes only when capital is added or withdrawn.
Option (2) Credited to Partner's Current Account — Incorrect. A credit would add to what the firm owes the partner, but interest on drawings is charged to him.
Option (4) Credited to Partner's Capital Account — Incorrect. It is the wrong account and the wrong side: the capital account is not used, and the charge is a debit.