MyQuestionIcon

1

You visited us 1 times! Enjoying our articles? Unlock Full Access!

Providing Interest on Capital

is allowed to...

Question

is allowed to compensate partners for contributing capital more than the profit sharing ratio.

A

interest on Drawings

No worries! We‘ve got your back. Try BYJU‘S free classes today!

B

interest on Profit

No worries! We‘ve got your back. Try BYJU‘S free classes today!

C

interest on Capital

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

D

interest on Assets

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is C interest on Capital
Interest on capital is allowed to compensate partners for contributing capital more than the profit sharing ratio. Interest is payable to the partners and hence, the partner's capital account is credited with the amount of interest.

Suggest Corrections

thumbs-up

0

Similar questions

Q. X and Y are partners in a firm sharing profits in the ratio of 3 : 2 . On 1st April, 2018, they admit Z as a new partner for 1/4th share in the profits . Z contributed following assets towards his capital and for his share of goodwill:
Stock ₹ 60,000 ; Debtors ₹ 80,000; Land ₹ 1,00,000 , Plant and Machinery ₹ 40,000. On the date of admission of Z , the goodwill of the firm was valued at ₹ 6,00,000.
Pass necessary journal entries in the books of the firm on Z's admission.

Q. A and B are partners sharing Profit and Loss in the ratio 3 : 2 having Capital Account balances of ₹ 50,000 and ₹ 40,000 on 1st April, 2017. On 1st July, 2017, A introduced ₹ 10,000 as his additional capital whereas B introduced only ₹ 1,000. Interest on capital is allowed to partners @ 10% p.a.
Calculate interest on capital for the financial year ended 31st March, 2018.

Q. Anshul and Asha are partners sharing profits and losses in the ratio of 3 : 2. Anshul being a non-working partner contributed ₹ 8,00,000 as her capital. Asha being a working partner did not contribute capital. The partnership Deed provides for interest on capital @ 5% and salary to every working partner @ ₹2,000 per month. Net profit before providing for interest on capital and partner's salary for the year ended 31st March, 2018 was ₹ 32,000.

Q. A,B & C are partners sharing profits in the ratio

2 : 2 : 1

. On retirement of B, goodwill was valued as

R s .30, 000

. Find the contribution of A and C to compensate B.

Q. Anshul and Asha are partners sharing profits and losses in the ratio of 3 : 2. Anshul being a non-working a - partner contributed Rs. 8,00,000 as her capital. Asha being working partner did not contribute capital. The Partnership Deed provides for interest on capital @ 5% and salary to every working partner @ Rs.2,000 per month. Net profit before providing for interest on capital and partner's salary for the year ended 31st March, 2018 was Rs. 32,000. Show distribution of profits.

Join BYJU'S Learning Program

similar_icon

Related Videos

lock

Calculating Interest on Capital

ACCOUNTANCY

Watch in App

explore_more_icon

Explore more

Providing Interest on Capital

Standard XII Accountancy

Join BYJU'S Learning Program

CrossIcon