Interest on capital allowed to a partner is debited to: MCQ with Answer and Explanation

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Interest on capital allowed to a partner is debited to:

A. Suspense Account

B. Partner's Capital Account

C. Interest Account

D. Profit & Loss Appropriation Account

Answer: Option D

Solution (By JKSSB Mock Tests)

Interest on capital is an appropriation of profit, thus debited to the P&L Appropriation Account and credited to the Partner's Capital Account.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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