Read the text and answer the question :

Suresh and Dinesh were partners in a fast-food corner sharing profits and losses in ratio 3:2. They sold fast food items across the counter and did home delivery too. Their initial fixed capital contribution was ₹1,20,000 and ₹80,000 respectively. At the end of first year their profit was ₹1,20,000 before allowing the remuneration of ₹3,000 per quarter to Suresh and ₹2,000 per half year to Dinesh. Such a promising performance for first year was encouraging, therefore, they decided to expand the area of operations. For this purpose, they needed a delivery van, a few Scooties and an additional person to support. Six months into the accounting year, they decided to admit Rajesh as a new partner and offered him 20% as a share of profits along with monthly remuneration of ₹2,500. Rajesh was asked to introduce ₹1,30,000 for capital and ₹70,000 for premium for goodwill. Besides this Rajesh was required to provide ₹1,00,000 as loan for two years.  Rajesh readily accepted the offer. The terms of the offer were duly executed and he was admitted as a partner.

Remuneration will be transferred to which of the following accounts of Suresh and Dinesh at the end of the accounting period?

Current Account's

The correct answer is option 3- Current Account's.

Remuneration will be transferred to Current Account's of Suresh and Dinesh at the end of the accounting period. As the partner's capital is fixed means 2 accounts are maintained i.e. capital account and current account. Remuneration will be transferred to the credit side of partner's current account.

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the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.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.