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Question

Interest on capital will be paid to the partners if provided for in the agreement but only from __________.

A
profits
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B
reserves
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C
accumulated profits
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D
goodwill
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Solution

The correct option is A profits
Interest on capital will be paid to the partners if provided for in the agreement but only from profits. Interest on capital is an appropriation and not a charge against profit hence, is provided only to the extent of profits.

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