CBSE 2025, Compartment, Set 1

Question

There are two statements, Assertion (A) and Reason (R).
Assertion (A): Under the fluctuating capital method, only one account, i.e., capital account is maintained for each partner.
Reason (R): All the adjustments such as share of profit and loss, interest on capital, drawings, interest on drawings, salary or commission to partners, etc. are recorded directly in the capital accounts of the partners.
Choose the correct alternative from the following: A). Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A). B). Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A). C). Assertion (A) is correct, but Reason (R) is incorrect. D). Assertion (A) is incorrect, but Reason (R) is correct.

Edvaya · Accepted Answer

The correct answer is Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).. Under the fluctuating capital method, all adjustments related to partners are made directly in their capital accounts, which is why only a single account (Capital Account) is maintained, and its balance fluctuates with every transaction. Hence, both statements are correct, and the reason explains the assertion.

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Accountancy > Accounting For Partnership Firms > Fundamentals Of Partnership

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