This document discusses capital accounts for business partnerships. Capital accounts track the capital invested by each partner and items that affect their balance like drawings, profits/losses, additional capital contributions. The document compares two methods for maintaining capital accounts - the fixed capital method where a partner's original capital remains the same unless changed, and the fluctuating capital method where a partner's capital balance fluctuates each year based on business performance.

3. MEANING
Investment made by partners to the
business is capital. Account opened
for this purpose are called capital
accounts. Capital accounts are
personal in
nature.

4. ITEMS INCLUDED IN CAPITAL
ACCOUNT
DEBIT SIDE CREDIT SIDE
Drawing [ cash and kind]
Interest on drawings
Share of loss
Opening balance of capital
Additional capital
Interest on capital, assets
brought in, salary to the
partner
commission to the partner
Share of profit

5. METHODS OF MAINTAINING
CAPITAL ACCOUNT
Fixed capital method
Fluctuating capital method

6. FIXED CAPITAL METHOD
This method is known as fixed capital method, as
the original capital invested by any partner remains
the same unless additional capital is bought in or
part of the capital is withdrawn as per agreement

7. FLUCTUATING CAPITAL
METHOD
 Since the capital balance of partners keeps on
fluctuating from year to year, this method is known
as “Fluctuating capital method". It is also known as
floating capital method

8. THANKS