Question:medium

In the books of a partnership firm maintaining fluctuating capital accounts, which of the following appropriations or adjustments would result in a credit to the Partners' Current Accounts?

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To remember which side to record an item on: If it makes the partner "richer" (Interest, Salary, Profit), it goes on the Credit side. If it makes them "poorer" (Drawings, Interest on Drawings, Loss), it goes on the Debit side.
Updated On: May 30, 2026
  • Interest allowed on partners' capitals
  • Remuneration, salary or commission payable to partners
  • Share of divisible profits transferred to partners
  • All of the above items
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The Correct Option is D

Solution and Explanation

Step 1: Understanding the Concept:
In partnership accounting, there are two primary methods for maintaining capital accounts: the Fixed Capital Method and the Fluctuating Capital Method.
Under the Fixed Capital Method, two separate accounts are maintained for each partner:
1. Capital Account: Records only the initial capital and any additional capital introduced or permanent withdrawals.
2. Current Account: Records all regular appropriations and adjustments like interest, salary, and profits.
In the Fluctuating Capital Method, all transactions (capital and adjustments) are recorded in a single Capital Account.
The question asks about credits to the Partners' Current Accounts. This implies the context of the Fixed Capital Method, where Current Accounts are used to record items that increase or decrease the partner's claim against the firm.
Step 2: Detailed Explanation:
Appropriations that increase the partner's balance are recorded on the Credit side of their respective personal account (Capital or Current).
1. Interest on Capital: This is an income for the partner, increasing their total claim against the firm. Thus, it is credited.
2. Remuneration/Salary/Commission: Any payment due to a partner for services rendered increases their balance and is credited.
3. Share of Divisible Profit: The profit remaining after all appropriations in the Profit and Loss Appropriation Account is distributed among partners, which further increases their balance and is credited.
Step 3: Final Answer:
Since all the listed items (a), (b), and (c) represent additions to the partner's stake in the business, they all result in a credit entry to the partner's account.
Therefore, the correct option is (d).
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