Interest on capital the overall capital.

reduces

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does not reduce

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ignores

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changes

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Solution

The correct option is B does not reduce
Interest on capital does not reduce the overall capital because we always go with the assumption with interest on capital is invariably invested back in the business.

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Similar questions

Does Interest on capital changes the amount of capital?

At the year-end, the interest on drawings ____ the capital balance & the interest on capital ______ the capital balance.

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