The document discusses how to prepare current accounts for partners in a partnership. It explains that each partner has a separate current account to track their capital balance and share of profits or losses. The current account shows credits for the partner's profits, salary, interest on capital, and share of residual profits. Debits include drawings and interest on drawings. At the end of each period, the current account is balanced, with a debit balance meaning the partner owes money to the company and a credit balance meaning the company owes money to the partner.

1. Preparation of current
account of partners
Section 8
Objective 8

2. Current Account
• Each partner in a partnership company has a
fixed separate capital account.
• The account shows the capital that he or she
has invested at the start of the business or
during the financial period of the business
• Using the fixed capital account format, any
changes in capital resulting from profit or
drawings are shown in each partner current
account

3. Prepare current accounts of partners
• Each partner has a separate current account
• The credit side of the current shows all the profits of the
partner
• The credit side of the current account shows all the profits
of the partner such as salary, interest on capital and the
share of residue profits.
• The debit side of the current account show drawings and
interest on drawings

4. Current Account
• When the current account is balanced, it may
have either a debit balance or a credit balance
• a debit balance indicates
– that the partner has withdrawn too much
money or goods in anticipation of expected
profits
– that the drawings are greater than the
amount profits due to the partner
– that the partner becomes a debtor to the
company

5. Prepare current accounts of partners
• A current account with a credit balance indicates that
company owes the partner.
• Therefore a debit balance in a partner’s current account
will be shown under current assets, while a credit balance
will be listed as a current liability

6. Example of current account – single form

7. Format of columnar current account