Which of the following is the feature of fluctuating capital?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Each partner has one account, i.e. capital account under this method
Under the fluctuating capital method, only one account — the capital account — is kept for each partner. Drawings, interest, salary and share of profit are all posted to it, so its balance changes from year to year.
Why the other options are incorrect
Option (1) Under this method, two separate accounts are maintained for each partner, viz., 'capital account' and 'current account. — Incorrect. Two accounts are the mark of the fixed capital method.
Option (3) Each partner has one account, i.e. current account under this method — Incorrect. The single account is the capital account; a current account exists only under the fixed capital method.
Option (4) The capital account balance remain unchanged unless there is addition or withdrawal of capital. — Incorrect. An unchanged balance describes the fixed method; under the fluctuating method the balance moves every year.
NCERT (2026-27 edition):
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