Jasmeet_SethiCurious In: 1. Financial Accounting > Partnerships What is fluctuating capital? What is fluctuating capital? Share Facebook You must login to add an answer. Username or email* Password* Captcha* Remember Me! Forgot Password? Need An Account, Sign Up Here 1 Answer Voted Recent GautamSaxena Curious . 2022-08-01T20:11:58+00:00Added an answer on August 1, 2022 at 8:11 pm This answer was edited. Fluctuating Capital Fluctuating capital is a capital that is unstable and keeps changing frequently. In the fluctuating capital, the capital of each partner changes from time to time. In partnership firms, each partner will have a separate capital account. Any additional capital introduced during the year will also be credited to their capital account. In the fluctuating capital method, only one capital a/c is maintained i.e no current accounts like in the fixed capital a/c method. Therefore, all the adjustments like interest on capital, drawings, etc. are completed in the capital a/c itself. It is most commonly seen in partnership firms and it is not essential to mention the Fluctuating Account Method in the partnership deed. All the adjustments resulting in a decrease in the capital will be debited to the partner’s capital, such as drawings made by each partner, interest on drawings, and share of loss. Similarly, the activities or adjustments that lead to an increase in the capital are credited to the partner’s capital account, such as interest on capital, salary, the share of profit, and so on. Fluctuating Capital Account Format 0 Share Share Share on Facebook Share on Twitter Share on LinkedIn Share on WhatsApp Related Questions Accounting terms What do you mean by goodwill ? What do you mean by LLP ? What are kind or classes of shares issued by companies in accounting ? Which type of accounting is done by NPOs ? How to locate errors in trial balance? what does a trial balance include?