Write three distinctions between Fixed Capital Account and Fluctuating Capital Account.

Question

Here are three distinctions between fixed capital account and fluctuating capital account:BasicFixed Capital A/cFluctuat...

Accepted Answer

Here are three distinctions between fixed capital account and fluctuating capital account:BasicFixed Capital A/cFluctuat...

Basic	Fixed Capital A/c	Fluctuating Capital A/c
Meaning	Fixed capital refers to long-term assets used in production.	While fluctuating capital refers to short-term assets used in day-to-day operations.
Uses	Fixed capital is used to acquire and maintain long-term assets.	While fluctuating capital is used to fund short-term needs.
Accounting Treatment	Fixed capital is managed by the owners or senior management.	While fluctuating capital is managed by the operational level of the business.
Balance Type	Generally shows a credit balance unless capital is withdrawn.	May have a credit or debit balance depending on transactions.
Suitability	Suitable for firms with stable and long-term investment needs.	Suitable for firms with frequent financial adjustments.