When the fixed capital method is used; the partners’ share of profits and remunerations are credited to the?

By: |Published on: Nov 30|Categories: Accounting JAMB| 0 comments

A. current account
B. profit and loss account
C. profit and loss appropriation account
D. capital account

Correct Answer:

Option D – capital account

Explanation

The partnership capital account is an equity account in the accounting records of a partnership. It contains the following types of transactions:

  • Initial and subsequent contributions by partners to the partnership, in the form of either cash or the market value of other types of assets
  • Profits and losses earned by the business, and allocated to the partners based on the provisions of the partnership agreement
  • Distributions to the partners

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