Glossary
Partner's current account
In a partnership, the account that collects a partner's profit shares, salary and drawings.
What it means
An account recording the fluctuating amounts owed to or by a partner, including profit share, interest, salary and drawings.
Example
A partner's current account is credited with RM12,000 profit share and debited with RM8,000 drawings.
Why it matters
It shows how much of the business the partner has left in beyond fixed capital, and can be a debit or credit balance.
In practice
The current account gathers a partner's year-to-year dealings with the firm. It sits beside the capital account in the capital and reserves section of the statement of financial position. It is credited with the partner's share of profit, any salary and any interest on capital. It is debited with drawings and interest on drawings.
Suppose Ben starts the year owed RM2,000, earns a RM8,000 profit share and RM1,500 salary, and takes RM9,000 in drawings. His current account closes with a RM2,500 credit balance. The firm owes him that sum.
Unlike the capital account, which stays fixed, the current account changes all the time. A debit balance is possible. It means a partner has drawn out more than has been credited to them, so they owe money back to the firm. Keeping these items apart from capital lets partners see how their entitlements and withdrawals compare over the year.
If you find it hard to balance a current account, one of our teachers can work through one with you using past-paper figures. Book a trial class.
Related terms
Syllabus reference: Cambridge 0452 and 0985, syllabus for 2027 to 2029, sub-topic 5.2 Partnerships (page 16).
Definitions here are general accounting explanations for study. For your board's exact wording, see its official syllabus via Sources.
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