Distinction between Fixed Capital Method and Fluctuating Capital Method

The main differences between the two methods of maintaining capital accounts are as follows:-

 

Basis of distinction	Fixed Capital Method	Fluctuating Capital Method
1. Change in capital	The capital normally remains unchanged except under special circumstances.	The capital is changing from period to period.
2. Number of Accounts	Each partner has two accounts, namely, Captial Account and Current Account.	Each partner has only one account i.e., Capital Account.
3.  Balance	Capital Account shows always a credit balance. Current account may sometimes show debit or credit balance.	Capital Account shows always a credit balance.
4. Adjust- ments	All adjustments relating to partners are recorded in the Current Accounts.	All adjustments relating to partners are recorded directly in the Capital Accounts itself.