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Standard XI
Accountancy
Recording Interest on Capital & Drawings
At the year-e...
Question

At the year-end, the total interest on capital is ______ to the profit & loss account?


A

Debited

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B

Credited

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C

Not transferred

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D

None of the above

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Solution

The correct option is A

Debited


Interest on capital is an expense for the business, hence debited to profit or loss account.


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Q. If interest on capital, salary to the partner and share of profit are credited while interest on drawings, drawings and share of loss are debited to the Partners' Capital Accounts, what is the method followed to maintain the Capital Accounts?
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(b) B introduced capital of Rs.1,00,000 during the year.
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(b) B introduced capital of Rs.1,00,000 during the year.
(c) Interest on capital credited to the Capital Accounts of A and B were Rs.15,000 and Rs.10,000 respectively.
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