| Fixed capital method | Fluctuating capital method |
| 1. under this method, two accounts namely capital account and current account are prepared for each partner | 1. Each partners has one account i.e. capital account |
| 2. All adjustments are made in the current account and not in the capital accounts. | 2. All adjustments for drawings, salary, interest on capital etc. are made in the capital accounts |
| 3. The capital account balance remain unchanged unless there is addition or withdrawal of capital. | 3. The balance of the capital account fluctuates from year to year. |
| 4. The capital account always shows a credit balance. | 4. The capital account may sometimes show a debit balance. |
