Capital accounts and current accounts
Each partner has a capital account for what they put in and a current account for profit and drawings. Work out the closing balances.
Task 1Two accounts for each partner3 questions
- Capital account
- the long-term money a partner has put into the business. It changes only when capital is paid in or taken out for good
- Current account
- the partner's running account with the business. It changes every year
The current account is credited with everything the partner earns in the appropriation account: salary, interest on capital and share of residual profit.
It is debited with what the partner takes out or is charged: drawings and interest on drawings.
Task 2Nia's current account3 questions
Task 3Ben's current account4 questions