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Answer:- Items that may be shown on the debit side of the Capital Account of a partner are: i) Drawings ii) Interest on drawings iii) Share of Loss
Answer:- i) Cash/Bank A.c (Introduction of Capital) ii) Opening Balance of Partner’s Fixed Capital Account
Answer:- i) Interest on capital is allowed (paid) by the firm to the partners whereas interest on drawings is charged by the firm. ii) Interest on drawings is credited to Profit and Loss Appropriation Account and interest on capital is…
Two instances in which the fixed capitals of partners may change are: i) When additional capital is introduced by the partners. ii) When a part of the capital is withdrawn by the partners.
Answer:- Basis Fixed Capital Account Fluctuating Capital Account No. of Accounts maintained Each partner has two accounts: i) Capital Account and ii) Current Account Each Partner has only one account, i.e., Capital Account. Frequency of Change Under this method, the…
Capital Account shows the transactions relating to the introduction or withdrawal of capital whereas Current Account shows the transactions sich as interest on capital, drawings, salary, commission, the share of profit/Loss, etc.
Answer:- Interest allowed on capital is debited to Profit and Loss Appropriation Account because it is an appropriation of profit and not a charge against profit.
Yes, it is debited to Profit and Loss Account if the Partnership Deed provides that it is to be paid whether the firms earns profit on not.
Answer:- Interest on Capital means the interest on the partner’s capital. It is a distribution of part of the profit in the capital ratio. Interest on capital is allowed to compensate those partners who have contributed more capital than the…
Answer:- Adjusting Entry:- Interest on Capital A/c …Dr. To Partner’s Capital A/c (Being the interest on capital allowed to partner)