Capital Accounts show each partner's investment in the business and their equity. Treatment: Capital accounts can be Fixed (permanent) or Fluctuating (changes with profit/loss and drawings). Fixed Capital Approach: Capital account remains constant at original investment; only opening balance is shown. Profit share, drawings, interest, salary are shown in Current Accounts. Perpetual Capital Method: Capital account is adjusted at year-end to include share of profit/loss and deduct drawings. Calculation: Opening Capital + Profit Share - Drawings + Interest on Capital - Drawings Adjustment = Closing Capital. Journal Entries: Capital Contributions: Debit Bank/Assets, Credit Partner's Capital Account. Interest on Capital (if provided): Debit P&L Appropriation Account, Credit Partner's Capital Account (when fixed) or Current Account (when fluctuating). Allocation of Profit: Debit P&L Appropriation, Credit Partner's Capital/Current Account for profit share. Drawings: Debit Partner's Capital Account (or Current Account), Credit Bank for amounts withdrawn. Balance Sheet Presentation: Capital accounts shown under Equity; opening and closing capital disclosed. Verification: Total partners' capital must reconcile with net assets in balance sheet. Exam tip: Master both fixed and fluctuating capital approaches; practice the reconciliation of capital accounts; understand journal entry treatments; know when interest on capital is credited.