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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Capital withdrawn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· The capitals of the partners shall remain fixed unless additional capital is introduced or a part of the capital is withdrawn as per the agreement among the partners.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to bank (capital withdrawn)		*******	By balance b/d	*******	*******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

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FAQs on Partner Capital Account - Crash Course of Accountancy - Class 12 - Commerce

1. What is a partner capital account in commerce?

Ans. A partner capital account in commerce refers to the individual account maintained for each partner in a partnership firm. It records the initial capital investment made by each partner, as well as any subsequent contributions, withdrawals, and share of profits or losses. The capital account is essential for tracking the financial interests of each partner and determining their entitlements in the partnership.

2. How is the partner capital account calculated?

Ans. The partner capital account is calculated by considering the initial capital investment made by each partner, any additional contributions or withdrawals, and the share of profits or losses attributed to each partner. To calculate the closing balance of the capital account, the opening balance is adjusted by adding contributions and share of profits, and subtracting withdrawals and share of losses.

3. What is the significance of partner capital accounts in commerce?

Ans. Partner capital accounts play a crucial role in commerce as they help maintain transparency and fairness in partnership arrangements. These accounts allow partners to track their individual investments and share of profits or losses accurately. They also serve as a basis for determining the distribution of profits, the allocation of losses, and the overall financial position of each partner within the partnership.

4. How are partner capital accounts different from current accounts in commerce?

Ans. Partner capital accounts and current accounts are both used in commerce, but they serve different purposes. While partner capital accounts track the long-term investment and financial interests of each partner, current accounts are used to record short-term transactions such as withdrawals, deposits, and expenses. Current accounts are typically settled at the end of an accounting period, while capital accounts remain ongoing throughout the partnership.

5. Can partner capital accounts change over time?

Ans. Yes, partner capital accounts can change over time due to various factors. Changes in partner capital accounts can occur when partners make additional capital contributions, withdraw funds, or when there are profits or losses in the partnership. It is essential to regularly update and reconcile partner capital accounts to reflect these changes accurately.

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Document Description: Partner Capital Account for Commerce 2024 is part of Crash Course of Accountancy - Class 12 preparation. The notes and questions for Partner Capital Account have been prepared according to the Commerce exam syllabus. Information about Partner Capital Account covers topics like and Partner Capital Account Example, for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Partner Capital Account.

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