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Charge against Profits

Interest on c...

Question

Interest on capital is an appropriation of .

A

drawings

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B

capital

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C

profit

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D

interest

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Solution

The correct option is C profit
Interest on capital is an appropriation of profits, i.e. the distribution of profits.

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Similar questions

Q. Interest on capital is given from profit and loss appropriation account to a partner __________________.

Q. A and B are partners having capital of Rs. 5,000 and Rs. 6,000 respectively. Interest on capital is given @ 5% p. a. Profits for the year before the appropriation is Rs. 4.600 provide interest on capital out of profits. Interest allocated to partners is:

Q. Interest on capital is a/an ____________.

1 - 1 - 2015

balance in capital account of partner was Rs.

1, 00, 000

. He introduced certain amount on

1 - 5 - 2015

. As per partnership deed interest on capital is to be provided @

12 %

p.a. If Profit & Loss Appropriation A/c is debited for Rs.

18, 000

as interest on capital, how much amount was introduced by the partner on

1 - 5 - 2015

?

A

B

are partners. A's Capital is

R s . 1, 00, 000

and B's Capital is

R s . 60, 000

. Interest on capital is payable @ 6% p.a.

B

is entitled to a salary of

R s . 3, 000

per month. Profit for the current year before interest and salary to B is

R s . 80, 000

.
Prepare Profit and Loss Appropriation Account.

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