WHERE PARTNERS MAINTAIN A FLUCTUATING CAPITAL ACCOUNT, PARTNERS’ SHARE OF PROFIT IS CREDITED TO
March 27, 2024
- A. capital account ✓
- B. profit and loss appropriate account
- C. current account
- D. profit and loss account
In partnership where partners maintain a fluctuating capital account, partners’ share of profit is credited to capital account.
Steps to Determine the Answer:
- Partners’ share of profit in a partnership is a component of their ownership interest in the firm.
- In a fluctuating capital account system, all transactions related to partners’ interests, including profits and losses, are recorded in the partners’ capital accounts.
- Therefore, when partners receive their share of profit, it is credited to their capital accounts to reflect the increase in their ownership stake in the partnership.