Section 3 of 8
| Account | Purpose | Type |
|---|---|---|
| Capital account | Records original capital invested; updated only when partnership structure changes (new partner, retirement, revaluation, goodwill) | Fixed — rarely changes |
| Current account | Records each period's profit/loss allocations and drawings | Fluctuating — changes every year |
Total partner investment = capital account balance + current account balance
| Side | Items |
|---|---|
| Credit (increases balance) | Interest on capital; partner salary; share of remaining profit |
| Debit (decreases balance) | Interest on drawings; drawings; share of remaining loss |
Current accounts are usually presented in a single columnar table:
Current accounts
Dr A(£) B(£) C(£) | Cr A(£) B(£) C(£)
Bal b/d * — 162 — | Bal b/d 85 — 130
Int on drawings * 460 320 410 | Salary — 7,500 —
Drawings * 11,500 8,000 10,250 | Int cap 3,000 2,100 2,400
Bal c/d * 15,875 17,618 8,370 | Profit 24,750 16,500 16,500
27,835 26,100 19,030 | 27,835 26,100 19,030
| Bal b/d 15,875 17,618 8,370
A balance on the Dr side brought down (b/d) means the account was overdrawn at the start. A balance on the Cr side brought down means the account was in credit.
Capital accounts
Dr A(£) B(£) C(£) | Cr A(£) B(£) C(£)
Bal c/d * 50,000 40,000 40,000 | Bal b/d 50,000 30,000 40,000
| Bank — 10,000 —
50,000 40,000 40,000 | 50,000 40,000 40,000
| Bal b/d 50,000 40,000 40,000
Partner A Partner B Partner C £
Capital accounts 50,000 40,000 40,000 130,000
Current accounts 15,875 17,618 8,370 41,863
65,875 57,618 48,370 171,863
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