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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. 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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