Difference between Current account and Capital account
|Current account||Capital Account|
|Nature||When capital is introduced or withdrawn by the partner, the balance of this account does not changes.||Balance of capital changes when further capital is introduced or withdrawn by the partner except when there is a fixed capital.|
|It is maintained when fixed capital account method is being followed.||It is maintained in all cases, whether following Fluctuation Capital Account Method or Fixed Capital Account Method.|
|Can be a debit or a credit balance.||Will always have a credit balance when Fixed Capital Account Method is followed. In case of Fluctuating Capital Account Method, it may have either credit or a debit balance.|
|It records transactions such as interest on capital, salary, commission, etc.||It records the amount invested by partners in the firm.|
The balance sheet is the last financial statement that is prepared by any organization. This statement helps to ascertain the true financial position of an enterprise at the end of an accounting period
A profit and Loss Account is the second financial statement prepared by an organization. This account is prepared to ascertain the net results of a firm in form of net profit earned or net loss incurred during an accounting period.
Accounting software is an integral part of the computerized accounting system. The accounting software should be selected after considering the level of skill and proficiency of the accounting professionals.
Accounting Reports: When the collected data is processed and manipulated in a useful sense that can be understood by the users without any ambiguity, then it becomes information.
Transaction Processing System (TPS) refers to a computerized system that records, processes, validates, and stores routine transactions that occur in various functional areas of a business on daily basis.
The amount of minimum profit that is to be paid to the guaranteed partner is known as Guaranteed Profit. The partner to whom such guarantee of profit is made is known as Guaranteed Partner
Under Fixed Capital Method, the capital balances of the partners remains unchanged. It changes only when any amount of capital is withdrawn or additional capital is introduced during the accounting year by the partners.
Disadvantages of LLP: Limited Liability Partnership (LLP) is not immune from the acts of its partners who might act to the disadvantage of the firm. Thereby making the firm liable for their acts.
Difference between LLP and Partnership Firm: LLP has an entity separate from its owners. Partnership Firm does not have a separate entity…