Question

Which of the following statement is not true for fixed capital account?

Options

• The capital account balance remains unchanged unless there is addition to or withdrawal of capital.

• The capital accounts always show a credit balance.

• Each partner has only one account. i.e. capital account, under this method.

• All adjustments for drawings, salary, interest on capital etc. are made in the current accounts.

Answer 1

Each partner has only one account. i.e. capital account, under this method.

Explanation:

Under the fixed capital amount technique, each partner has two accounts: a capital account and a current account.