Partner's current account is maintained when partnership firm is following fixed capital method.All the adjustments made in respect to the partners will be transferred to current account.

Current Account in Partnership Firms

Current Account is one of the types of accounts maintained by partnership firms. It is a personal account of each partner in the firm. In this account, the capital contribution of each partner is recorded along with other transactions related to the partner's share in the profits and losses of the firm.

Features of Current Account

The following are the features of the current account in partnership firms:

1. Personal Account: Current Account is a personal account of each partner in the firm.

2. Not Part of Capital: The balance in the current account is not a part of the capital of the firm. It represents the partner's share in the profits and losses of the firm.

3. Interest on Balance: The partners are entitled to receive interest on the balance in their current account. The rate of interest is decided by the partnership deed.

4. Withdrawal of Balance: The partners can withdraw the balance in their current account at any time, subject to the provisions of the partnership deed.

5. No Right on Assets: The balance in the current account does not give any right to the partners on the assets of the firm.

6. Adjusted at the Time of Distribution of Profits: The balance in the current account is adjusted at the time of distribution of profits among the partners.

Treatment of Current Account in Partnership Firms

The following are the treatment of current account in partnership firms:

1. Recording Transactions: The transactions related to the current account are recorded in the partner's account in the ledger.

2. Interest on Balance: Interest on the balance in the current account is credited to the partner's account in the ledger.

3. Withdrawal of Balance: Withdrawal of balance by the partner is debited to the partner's account in the ledger.

4. Adjustment of Balance: The balance in the current account is adjusted at the time of distribution of profits among the partners.

Conclusion

In conclusion, current account is an important account in partnership firms. It represents the partner's share in the profits and losses of the firm. The balance in the current account is not a part of the capital of the firm and does not give any right to the partners on the assets of the firm. The transactions related to the current account are recorded in the partner's account in the ledger.