Match List I with List II

\begin{array}{|cccc|}\hline \multicolumn{2}{c}{\text{LIST I}}& \multicolumn{2}{c}{\text{LIST II}}\\ \text{A.}& \text{Only Capital A/c exist}& \text{I.}& \text{Credited to partners’ account}\\ \text{B.}& \text{Capital account balance remain unchanged}& \text{II.}& \text{Debited to Partner's Capital Account}\\ \text{C.}& \text{Fresh/additional capital brought in by partner}& \text{III.}& \text{Fixed Capital Account}\\ \text{D.}& \text{Permanent withdrawal}& \text{IV.}& \text{Fluctuating Capital Account}\\ \hline\end{array}

\begin{array}{|c|}\hline \text{<br>}\\ \hline\end{array}

Choose the correct answer from the options given below:

The correct option is A-IV, B-III, C-I, D-II.

Let us understand the concepts of partnership capital accounts to match the items in List I with those in List II step-by-step:

1. A matches with IV (A-IV):
Under the Fluctuating Capital Account method, only one account, namely the Partner's Capital Account, is maintained for each partner. All transactions such as interest on capital, partner's salary, drawings, interest on drawings, and share of profit or loss are adjusted directly in this single capital account. Therefore, only Capital Accounts exist under the fluctuating method.

2. B matches with III (B-III):
Under the Fixed Capital Account method, two accounts are maintained for each partner: a Capital Account and a Current Account. The balance of the Capital Account remains unchanged (fixed) over time unless there is a permanent introduction of additional capital or a permanent withdrawal of capital. All day-to-day adjustments like interest, salary, drawings, and share of profits are recorded in the Current Account.

3. C matches with I (C-I):
When fresh or additional capital is brought in by a partner, it increases their capital balance. In double-entry bookkeeping, an increase in capital is recorded on the credit side. Therefore, fresh capital brought in by a partner is credited to the partner's account.

4. D matches with II (D-II):
A permanent withdrawal of capital represents a reduction in the partner's capital. A reduction in capital is recorded on the debit side. Thus, permanent withdrawal of capital is debited to the Partner's Capital Account.

Combining all the correct matches, we get:
A - IV
B - III
C - I
D - II