Exam layout
Partners' capital account format
Under the fixed capital method, each partner's capital account shows only their permanent investment, changing only when capital is formally introduced or withdrawn.
The standard format
- Opening capital balance for each partner
- Capital introduced during the year (rare)
- Capital withdrawn (rare)
- Closing capital balance carried down
- Shown per partner, often in columns
Filled example
| Balance b/d. Partner A | |
| Balance b/d. Partner B | RM 40,000 |
| Total capital | RM 90,000 |
Notes
- Capital accounts stay fixed under the fixed capital method.
- Profit shares, salaries and drawings go to the current account, not here.
- Each partner has a separate capital account, often shown in columns.
Building and reading this format
Each partner usually has two accounts: a capital account and a current account. The capital account holds the permanent stake.
Under the fixed capital method, the capital account changes only when capital is added or withdrawn. It also changes when something lasting happens, such as a revaluation of assets or a reorganisation of the partnership. Routine items such as profit share are kept out of it. This keeps the account stable and uncluttered.
The account is usually shown in columns, with one money column per partner, so you can read each partner's position across the page. It is a ledger account with a debit side and a credit side. The credit side holds amounts that increase a partner's stake: opening capital, extra capital introduced during the year, and upward revaluations credited to partners in their profit-sharing ratio.
The debit side holds amounts that reduce the stake: capital withdrawn, downward revaluations and any goodwill written off. The balance carried down at the year end is each partner's settled capital.
To build it, start with the opening balance on the credit side, because capital is normally a credit balance. Add any new capital introduced, with its date. If assets have been revalued, enter each partner's share of the surplus on the credit side, using the agreed ratio.
A deficit goes on the debit side. Suppose Aziz and Ben share profits equally and a property is revalued upward by RM40,000. Each is credited RM20,000.
A revaluation gain is a lasting change to the value of what they own. Finally, rule off, put the balance carried down on the debit side so the two sides agree, and bring it down on the credit side below the total.
Reading down each column shows how a partner's permanent stake has changed. Reading across shows who committed the most, who added capital, and how a revaluation was shared. Because routine items are kept out, any unusual entry stands out.
Marks are mostly lost by mixing the two accounts. Profit share, interest on capital, drawings and partners' salaries all belong in the current account under the fixed capital method. Entering opening capital on the debit side is wrong, since capital is a credit balance.
Sharing a revaluation surplus in the wrong ratio, or on the wrong side, also loses marks. So does failing to bring the balance down, which leaves no closing figure for the statement of financial position.
Head the account clearly, name each partner's column, and show the balance carried down and brought down.
If the capital and current accounts keep blending together in your answers, we can help. One of our teachers can set out both accounts side by side and show you which item belongs where. Book a trial class
Related how-to
These formats are standard accounting practice with our own figures. Check your board's exact requirements on the exam boards page.
Practise the partners' capital account
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