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Recap of Accounting Process

Interest on c...

Question

Interest on capital is added to the of partners.

A

drawings

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B

profit

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C

capital

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D

interest

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Solution

The correct option is C capital
Interest is payable to the partners, and hence, the partner's capital account is credited with the amount of interest. Interest on capital is added to the capital of partners.

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Q. Interest on capital is added to______.

Q. Interest on capital is ________ on business.

Does Interest on capital changes the amount of capital?

Q. X and Y are two partners in a partnership firm. As per the terms of partnerships deed partners are charged 6% interest on the fresh capital added by them. During the year ending 31st Dec., Y added fresh capital in the firm as per details given below:
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30th November Rs. 1000
Calculate the interest on fresh capital added by Y.

Q. When the Interest on capital is allowed to partners, Interest on Capital Account is debited and Partner's Capital Account is credited. It is called _____________.

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