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Providing Interest on Capital

Interest on c...

Question

Interest on capital is credited to ___________ account.

A

Expenses

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B

Income

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C

Capital

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D

Asset

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Solution

The correct option is B Capital
Capital is a contribution done by the owner in business. If any interest is payable, this need to be debited to Interest expenses and credited to the capital account.

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Under fluctuating capital account, the interest on capital is credited to ___

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 _____________.

Q. Interest on capital is credited to Partner's Current Account. Name the method of maintaining Capital Account.

A

B

are partners in a business and their capitals at the end of the year were

R s . 7, 00, 000

R s 6, 00, 000

respectively. Calculate their opening capitals considering the following information:
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A

B

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(b)

B

introduced capital of

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during the year.
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A

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A

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R s . 5, 000

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(e) Share of profit credited to Capital Accounts was

R s . 1, 00, 000

Q. The interest on partners capital accounts is to be credited to _______________.

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