Which of the following statements are true ?(A) Under fixed capital m…

Which of the following statements are true ?

(A) Under fixed capital method, capital & current accounts are prepared.

(B) If a partner withdrew in the beginning of each month, average period is 6.5 months taken for interest calculation.

(D) In the absence of partnership deed, profits are distributed in the capital ratio.

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → (A), (B) and (C) only

Three of the statements are rules of partnership accounts; the fourth gets the rule for sharing profits wrong.

(A) Under fixed capital method, capital & current accounts are prepared. Correct. The capital account stays fixed, and every other item such as profit, interest and drawings goes to a separate current account.

(B) If a partner withdrew in the beginning of each month, average period is 6.5 months taken for interest calculation. Correct. The first drawing is out for 12 months and the last for 1, so the average is (12 + 1) ÷ 2 = 6.5 months.

(C) No interest on capital is provided in the absence of partnership deed. Correct. Without a deed the Partnership Act applies, and it allows no interest on capital.

(D) In the absence of partnership deed, profits are distributed in the capital ratio. Incorrect. Without a deed the partners share profits equally, whatever capital each has put in.

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the capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.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):
When Fixed Amounts was Withdrawn Every Month – “… If withdrawn on the first day of every month, interest on total amount will be calculated for 6½ months; if withdrawn at the end at every month, it will be calculated for 5½ months, and if withdrawn during the middle of the month, it will be calculated for 6 months.”

NCERT (2026-27 edition):
Summary – “… 3. Provisions of Partnership Act 1932 applicable to accounting: If partnership deed is silent in respect of certain aspects, the relevant provisions of the Indian Partnership Act, 1932 become applicable. According to the Partnership Act, the partners share profits equally, no partner is entitled to remuneration, no interest on capital is allowed and no interest on drawings is charged. However, if any partner has given some loan to the firm, he is entitled to interest on such amount @ 6% per annum.”