Question

Assertion (A): The fixed capital account balance of a partner may change due to additional capital introduced or capital withdrawn or both during the year.

Reason (R): Under the fixed capital method, the partner’s capital accounts balance always remains the same.

In the context of the above two statements, which of the following is correct?

विकल्प

• Both (A) and (R) are correct.

• (A) is correct, but (R) is wrong.

• (A) is wrong, but (R) is correct.

• Both (A) and (R) are wrong.

Answer 1

(A) is correct, but (R) is wrong.

Explanation:

Under the fixed capital method, a partner’s capital account remains unchanged except when additional capital is introduced or capital is withdrawn permanently. So, Assertion (A) is correct because the balance may change due to these two reasons. However, Reason (R) is wrong because it incorrectly states that the capital balance always remains the same, ignoring these valid changes.