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Preparation of current
account of partners
Section 8
Objective 8
Current Account
• Each partner in a partnership company has a
fixed separate capital account.
• The account shows the capi...
Prepare current accounts of partners
• Each partner has a separate current account
• The credit side of the current shows ...
Current Account
• When the current account is balanced, it may
have either a debit balance or a credit balance
• a debit b...
Prepare current accounts of partners
• A current account with a credit balance indicates that
company owes the partner.
• ...
Example of current account – single form
Format of columnar current account
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Current account of partners

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current account single and columnar

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Current account of partners

  1. 1. Preparation of current account of partners Section 8 Objective 8
  2. 2. Current Account • Each partner in a partnership company has a fixed separate capital account. • The account shows the capital that he or she has invested at the start of the business or during the financial period of the business • Using the fixed capital account format, any changes in capital resulting from profit or drawings are shown in each partner current account
  3. 3. Prepare current accounts of partners • Each partner has a separate current account • The credit side of the current shows all the profits of the partner • The credit side of the current account shows all the profits of the partner such as salary, interest on capital and the share of residue profits. • The debit side of the current account show drawings and interest on drawings
  4. 4. Current Account • When the current account is balanced, it may have either a debit balance or a credit balance • a debit balance indicates – that the partner has withdrawn too much money or goods in anticipation of expected profits – that the drawings are greater than the amount profits due to the partner – that the partner becomes a debtor to the company
  5. 5. Prepare current accounts of partners • A current account with a credit balance indicates that company owes the partner. • Therefore a debit balance in a partner’s current account will be shown under current assets, while a credit balance will be listed as a current liability
  6. 6. Example of current account – single form
  7. 7. Format of columnar current account

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