In normal trading circ*mstances, which of the following would not be found in a partner's current account? (2024)

FAQs

In normal trading circ*mstances, which of the following would not be found in a partner's current account? ›

In normal trading circ*mstances, withdrawal of capital would not be found in a partner's current account.

Short-term commercial borrowings are not included in the current account of the Balance of Payment(BoP) in India.

Interest on capital is credited to Partner`s capital account when capitals are fluctuating.

Charging interest on drawings is a means of discouraging partners from withdrawing excessive amounts from the business. From this, it follows that interest on drawings is a debit entry in the partners' current accounts and a credit entry in the appropriation account.

Fluctuating capital is a type of capital account which changes/fluctuates every time there is addition in capital or when capital is withdrawn. Interest on capital, profit, salary, commission all appears on the credit side and interest on drawings, drawings appears on the debit side.

There is no restriction on the number and amount of deposits. There is also no restriction on the number and amount of withdrawals made, as long as the current account holder has funds in his bank account. Generally, bank does not pay any interest on current account.

A surplus is indicative of an economy that is a net creditor to the rest of the world. A deficit reflects a government and an economy that is a net debtor to the rest of the world. The four major components of a current account are goods, services, income, and current transfers.

Capital accounts track the net equity owned by each partner in a partnership and typically include such information as initial and subsequent capital contributions, each partner's distributive share of the profits and losses, and all distributions.

All the adjustments namely – interest on capital, the share of profit and loss, interest on drawings, drawings, commission to partners or salary, etc. are recorded in the partners' capital accounts.

A partner's opening capital account balance generally equals the value of his contribution to the partnership – (i.e. cash plus the net value of any contributed property). Example: Partner A contributes $100 and a truck with a FMV of $50 to form the AB partnership. decrease a partner's capital account.

Is drawings recorded in current account? ›

In the case of fixed capital accounts, other transactions such as drawings and profit are recorded in a separate account called the current account. Partner's current account will be debited when the interest on drawings is charged, when partner's follow fixed capital method.

Interest on drawings will be shown on the credit side of the profit and loss appropriation account. Interest on drawings is the interest charged by the firm on the drawings made by the partners. It is a source of income for the firm and hence, it is to be credited to profit and loss appropriation account.

Interest in drawings has the following two effects on final accounts: It is an income of the business. Therefore, it will be recorded on the credit side of the profit and loss account.

Fluctuating Capital Account Method

It mostly starts with a credit amount of the capital invested by the partner in the initial time of the business. All the adjustments leading to a decrease in the Capital are shown on the Debit side of the Capital Account.

Under fluctuating capital account, the interest on capital is credited to partner's capital account.

In the Fluctuating Capital method, the capital of individual partners changes over time. Each partner maintains a distinct capital account, initially credited with their initial investment. Any supplementary capital infused during the year is also credited to their respective capital accounts.

The summary of transactions consists of imports and exports of goods, services, capital, and transfer payments such as foreign aid and remittances. The capital account measures the changes in national ownership of assets, whereas the current account measures the country's net income.

The current account records of export and import in goods and services and stocks and bonds.

The current account balance of payments is a record of a country's international transactions with the rest of the world. The current account includes all the transactions (other than those in financial items) that involve economic values and occur between resident and non-resident entities.

Solution: "Trial Balance" is not a part of an account.