Fluctuating Capital Method

Unlike Fixed Capital Method, under Fluctuating Capital Method, only one account namely, Partners’ Capital Account is prepared. The basic difference between the two methods is that in the Fluctuating Capital Method, all the transactions either related to capital account or current account are recorded in the Partners’ Capital Account. This means that along with the opening capital balances all the related transactions (which are shown in the Partners’ Current Account above) such as drawings, interest on drawings, introduction of fresh capital, interest on capital, salary, share of profit or loss, commission, etc. are recorded in Partners’ Capital Account. This method is known as Fluctuating Capital Method because the closing capital balances of the partners change (fluctuate) from one year to another year.


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Fixed Capital Method

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 It changes only when any amount of capital is withdrawn or additional capital is introduced during the accounting year by the partners.

Balance Sheet

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

Profit and Loss Account

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

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.

What are Accounting Reports?

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

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.