When all partners current accounts are being closed?
In a partnership, the actual capital contribution of each partner is maintained in the Capital Account because the partner’s share of profits and his drawings are recorded in a separate Current Account. Thus the Capital Account is fixed and its balance is not affected by entries which are not contribution to capital by the partner in the form of cash or non-cash assets. Credit balances in the Current Accounts at the end of the accounting year represent undrawn profits. Sometimes the Current Account of a parnter may have a debit balance. This indicates the amount he owes the firm, having drawn out more than his share of profits.
