Difference between Fixed capital account method and Fluctuating capital account method is as follows :
| Point of Difference |
Fixed Capital Account Method |
Fluctuating Capital Account Method |
| 1. Meaning |
Where the opening balance and the closing balance of the partners capital account is reported unchanged is known as fixed capital account method. |
Where the opening balance and the closing balance of the partners capital account is reported flexible is known as fluctuating capital account method. |
| 2. Accounts |
To record all the transactions of the partners with the firm two accounts are opened in the books of the firm. (i) Capital account and (ii) Current account |
To record all the transactions of the partners with the firm only capital account is opened in the books of the firm. |
| 3. Treatment of Transaction |
In ‘capital account’, capital and changes in capital are recorded. Transaction as other than permanent capital are recorded in the current account. |
All transactions of capital and other than capital are recorded in the ‘capital account’. |
| 4. Balance of Account |
Fixed capital account has always credit balance and current account can have a debit or credit balance. |
Generally, capital account has credit balance. But under this method there can be debit balance of capital account. |
| 5. Treatment in Balance Sheet |
In fixed capital account method credit balance will be shown on capital-liability side of B/s. In current account method credit balance will be shown on capital- liability side and debit balance will be shown on asset side of balance sheet. |
In fluctuating capital account method, credit balance will be shown on capital-liability side of B/S and debit balance will be shown on assets- receivables side of balance sheet. |
| 6. Capital Proportion |
If permanent changes related to capital is not there, than capital amount remains same every year. |
If permanent changes are there or not capital amount changes every year. |
| 7. Interest on Capital |
If permanent changes related to capital is not there, interest on capital remains same every year. |
If permanent changes are there or not, interest on capital amount changes every year. |
