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Accounting

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01 February 2009 Sir, in amalgamation of the firms in partnership, can you please tell me what is the significance of transferring the partners capital account (who have excess capital than required ie.the capital of the amalgamated firm is give in Que like:the new firm's total capital will be 90000(for example)) to his current account? Can you please help me Sir?
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CA. B.SRINIVASULU

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CA. B.SRINIVASULU (Expert)
01 February 2009 In the case of a partnership firm the capital amount means it is fixed and they cannot withdraw ofen. Generally it will carry interest.

Contrary the current account means it is a running account and no interst is payable on the same and can withdraw at any time.

From the partners point of view amount parked in current accounts is liquid for him.

From the point of view of the company interest is being saved.

Another version is fixed capital means which is compulsorily required for the firm to run the business.
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