Under the fluctuating capital method, if a partner's share of profit is not credited but drawings are correctly debited, what will be the effect on the closing capital?

Correct answer: Closing capital will be understated by the amount of the omitted profit share

Under the fluctuating capital method, a partner’s share of profit is added to the capital (or current) account while drawings are debited. If the profit share is omitted, the capital is not increased by that amount, so the closing capital is understated by the omitted profit share. Option B states the opposite and is incorrect. Option C is wrong because omission of a profit credit does affect capital. Option D is irrelevant since drawings were already debited correctly. Exam tip: when using fluctuating capitals, post profit/interest and drawings directly to capital/current accounts and verify closing balances against the trial balance to catch omissions.