Question : In the case of fixed capital, interest on capital
Option 1: is credited to the partner's capital account
Option 2: is credited to the partner's current account
Option 3: maybe credited to the partner's capital and current account
Option 4: is debited to the partner's capital account
Correct Answer: is credited to the partner's current account
Solution :
Answer =
is credited to the partner's current account.
If capitals are fixed, then all adjustments, like interest on capital, etc., are transferred to the partner's current account. When handling fixed capital in a partnership firm, the partner's current account is credited with any income or profit, such as interest on capital. This practice accurately registers the partner's interest earnings and assigns them to their current account within the partnership framework.
Hence, the correct option is 2.
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