in partnership accounts, when both current and capital accounts of partners are given..all adjustments like revaluation p/l, goodwill etc should be done in which account-current or capital?
should it be done in capital a/c and the balance of current a/c simply be transferred to capital a/c?
i ve seen different methods in different books..dats y confused..
Generally, curent account of partners is opened in order to make entries during the year related to drawings, profit, interest, revaluation etc. mainly so that the Capital Account is not affected specially in the cases where profit sharing ratio is based on the capital contribution. Also, if any interest on capital is to be calculated it is easy since the capital contribution is not effected and amount is easily reflected by the balance in Capital A/c.
So, if current account is opened then all these entries should be done in current account.
THANX
CAclubindia
