Question

Distinguish between fixed and fluctuating capital accounts.

Give two differences between fixed and fluctuating capital accounts.

Answer 1

Basis	Fixed Capital	Fluctuating Capital
Capital  Balance	Generally, the capital balance of the partner remains unchanged except in cases where capital is withdrawn or additional capital is introduced.	Under this method, the capital balance of the partners keeps on changing from year to year.
Number of Accounts	In this method, two separate accounts are maintained, namely, Partner’s Capital Account and Partner’s Current Account.	In this method, only one account is maintained, i.e., the Partner’s Capital Account.