When the fixed capital method is used, the partners’ share of profits and remunerations are credited to the
-
A.
current account -
B.
profit and loss account -
C.
profit and loss appropriation account -
D.
capital account
Correct Answer: Option D
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