List - IList - II(A) Interest on loan(I) Current Account(B) Fixed cap… | Accountancy Part A CUET question

List - I	List - II
(A) Interest on loan	(I) Current Account
(B) Fixed capital	(II) Charge Against Profit
(C) Fluctuating capital	(III) Capital Account
(D) Interest on capital	(IV) Appropriation of Profit

Choose the correct answer from the options given below :

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A) - (II), (B) - (I), (C) - (III), (D) - (IV)

(A) Interest on loan — this matches (II) Charge Against Profit. Interest on a partner's loan is payable whether the firm earns a profit or not, so it is debited to the Profit and Loss Account before the profit is found.

(B) Fixed capital — this matches (I) Current Account. Under the fixed capital method the capital stays the same, and all other items (share of profit, interest, drawings) go to a separate current account.

(C) Fluctuating capital — this matches (III) Capital Account. Under the fluctuating capital method only one account, the capital account, is kept and every adjustment is made in it.

(D) Interest on capital — this matches (IV) Appropriation of Profit. It is allowed out of profits through the Profit and Loss Appropriation Account.

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the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.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

NCERT (2026-27 edition):
Maintenance of Capital Accounts of Partners – “… (b) Fluctuating Capital Method: Under the fluctuating capital method, only one account, i.e. capital account is maintained for each partner. All the adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings, salary or commission to partners, etc are recorded directly in the capital accounts of the partners.”

NCERT (2026-27 edition):
Profit and Loss Appropriation Account – “Profit and Loss Appropriation Account is merely an extension of the Profit and Loss Account of the firm. It shows how the profits are appropriated or distributed among the partners. All adjustments in respect of partner’s salary, partner’s commission, interest on capital, interest on drawings, etc. are made through this account.”

NCERT (2026-27 edition):
Distribution of Profit among Partners

Extract from the NCERT textbook

List - I	List - II
(A) Interest on loan	(I) Current Account
(B) Fixed capital	(II) Charge Against Profit
(C) Fluctuating capital	(III) Capital Account
(D) Interest on capital	(IV) Appropriation of Profit