Question : Which accounts are opened when the capital are fixed?
Option 1: Only capital account
Option 2: Only current account
Option 3: Capital account as well as current account
Option 4: Either capital account or current accounts
Answer (1)
14th Jan, 2024
Correct Answer: Capital account as well as current account
Solution :
Under fixed capital method the original capital invested by the partners remain constant, unless additional capital is introduced or drawing are made against capital by an agreement. When fixed capital method is adopted, all entries related to drawing, ioc, profit etc. are passed through current account. Capital and current both account are opened when the capital are fixed.
Hence, option 3 is the correct answer.
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