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Capital accounts of the partners can be maintained in two ways;
1) Fixed Capital Accounts
2) Fluctuating Capital Accounts
1) Fixed Capital Accounts
Under this method the capital invested by the partners remains constant unless additional capital is brought in or some part of the existing capital is withdrawn permanently by agreement. Entry is made in the Capiatl accounts only to record the capital inroduced or withdrawn permenently by the partners . All the other transactions relating to drawings, interest on capital or drawings, salary or commission to the partners, share of profit or loss etc are recorded in the newly opened Current Accounts.
Thus the two accounts are maintained in the books of the firm are:
a) Capital accounts b) Current accounts
PROFORMA OF CAPITAL ACCOUNTS
CAPITAL ACCOUNTS OF THE PARTNERS
| Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
To Cash / Bank A/c (withdrawl of capital account)
To balance c/d
|
|
|
|
By balance b/d(opening balance)
By cash/ Bank A/c(additional capital introduced)
|
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| |
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CURRENT ACCOUNTS
| Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
To balance b/d
To drawings
To interest on drawings
To P & L appropriation
To Balance c/d
|
|
|
|
By balance b/d(in case opening balance)
By Interest on Capital
By Salary
By Commission
By Profit and Loss appropriation A/c
|
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| |
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2) Fluctuating Capital Account
Under this method only one account is maintained i.e. Capital account. All the entries relating to drawings, interest on drawings, interest on capital account, salary, commission, profit or loss share etc are recorded in the capital accounts.
CAPITAL ACCOUNTS
| Particulars |
A |
B |
C |
Particulars |
A |
B |
C |
|
To drawings A/c
To interest on drawings A/c
To P & L appropriation A/c(Loss share)
To Balance c/d
|
|
|
|
By balance b/d
By Interest on Capital A/c
By Salary A/c
By Commission A/c
By Profit and Loss appropriation A/c (Profit share)
|
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| |
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Test
Gaurav Seth 6 years, 11 months ago
Capital accounts of the partners can be maintained in two ways;
1) Fixed Capital Accounts
2) Fluctuating Capital Accounts
1) Fixed Capital Accounts
Under this method the capital invested by the partners remains constant unless additional capital is brought in or some part of the existing capital is withdrawn permanently by agreement. Entry is made in the Capiatl accounts only to record the capital inroduced or withdrawn permenently by the partners . All the other transactions relating to drawings, interest on capital or drawings, salary or commission to the partners, share of profit or loss etc are recorded in the newly opened Current Accounts.
Thus the two accounts are maintained in the books of the firm are:
a) Capital accounts b) Current accounts
PROFORMA OF CAPITAL ACCOUNTS
CAPITAL ACCOUNTS OF THE PARTNERS
To Cash / Bank A/c (withdrawl of capital account)
To balance c/d
By balance b/d(opening balance)
By cash/ Bank A/c(additional capital introduced)
CURRENT ACCOUNTS
To balance b/d
To drawings
To interest on drawings
To P & L appropriation
To Balance c/d
By balance b/d(in case opening balance)
By Interest on Capital
By Salary
By Commission
By Profit and Loss appropriation A/c
2) Fluctuating Capital Account
Under this method only one account is maintained i.e. Capital account. All the entries relating to drawings, interest on drawings, interest on capital account, salary, commission, profit or loss share etc are recorded in the capital accounts.
CAPITAL ACCOUNTS
To drawings A/c
To interest on drawings A/c
To P & L appropriation A/c(Loss share)
To Balance c/d
By balance b/d
By Interest on Capital A/c
By Salary A/c
By Commission A/c
By Profit and Loss appropriation A/c (Profit share)
3Thank You