Partner Capital Account Notes | Study Crash Course of Accountancy - Class 12 - Commerce

Commerce: Partner Capital Account Notes | Study Crash Course of Accountancy - Class 12 - Commerce

The document Partner Capital Account Notes | Study Crash Course of Accountancy - Class 12 - Commerce is a part of the Commerce Course Crash Course of Accountancy - Class 12.
All you need of Commerce at this link: Commerce

Partner capital a/c
It is a personal account And is a liability for the firm so it carries a credit balance, so the items which will
Increase its balance will be credited like
Interest on capital
Partner Salary
Partner Commission
Divisible profits
Capital introduced
Decrease its balance will be credited like
Interest on drawings
Drawings
Capital withdrawn

Types of capital account

· Fixed capital account
· Fluctuating capital account

Fluctuating Capital Method: 
· Only one account, i.e. capital account is maintained for each partner.
· All the adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings, salary or commission to partners, etc are recorded directly in the capital accounts of the partners
                                                            Capital a/c

Particulars

A

B

Particulars

A

B

To drawings

****

****

By balance b/d (cr. Balance)

***

***

To interest on drawings

Xxxx

Xxxx

By interest on capital

XXX

XXX




By salary

XXX

XXX




By commission

Xxx

Xxx




By divisible profits

XXX

XXX








Fixed Capital Method 

· The capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.
· All items like share of profit or loss, interest on capital, drawings, interest on drawings, etc. are recorded in a separate accounts, called Partner’s Current Account
· The partners’ capital accounts will always show a credit balance, which shall remain the same (fixed) year after year unless there is any addition or withdrawal of capital
· The partners’ current account on the other hand, may show a debit or a credit balance.
· Two accounts are maintained for each partner viz., capital account and current account

                                                          Capital a/c        

Particulars

A

B

Particulars

A

B

to bank (capital withdrawn)


***

By balance b/d

***

***

To balance c/d

*** 

*** 

By bank (capital introduced)

***

***







                                                            Current a/c

Particulars

A

B

Particulars

A

B

To balance b/d (dr. balance)

***

***

By balance b/d (cr. Balance)

***

***

To drawings

****

****

By interest on capital

XXX

XXX

To interest on drawings

Xxxx

Xxxx

By salary

XXX

XXX

To balance c/d



By commission

Xxx

Xxx




By divisible profits

XXX

XXX

The document Partner Capital Account Notes | Study Crash Course of Accountancy - Class 12 - Commerce is a part of the Commerce Course Crash Course of Accountancy - Class 12.
All you need of Commerce at this link: Commerce

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