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

Interest Account

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Profit and Loss Account

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Drawing Account

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Partner's Capital Account

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Solution

The correct option is D Partner's Capital Account
Interest on partner's capital is an amount at an agreed rate of interest which is credited to a partner based on the amount of capital contributed by him/her.
Interest on partner's capital is an expense to the firm and hence debited to profit and loss appropriation A/c. On the other hand it is an income for partners and hence credited to partner's capital A/c.

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