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Interest on Capital Exceeds Profits

Is interest o...

Question

Is interest on capital provided in full during insufficiency of profits?

A

None of the above

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B

Not sure

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C

No, it is provided up to the extent of profits only.

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D

Yes, it is provided during insufficiency of profits

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Solution

The correct option is C
No, it is provided up to the extent of profits only.

No, interest on capital is provided only to the extent of profits available in case of insufficient profits and not provided if they incur losses.

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