Question

For the firm interest on capital is
(a) Capital payment
(b) Capital receipt
(c) Loss
(c) Income​

Answer 1

hiii ,,,,

solution:-

for the firm interest on Capital is loss.

( because Interest on Capital is the expense of the firm which is debited to profit and loss appropriation account.)

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Answer 2

The correct answer is (c) loss.

• Interest on capital is considered as an expense for the business and is added to the owner's capital, which increases the overall capital of the owner in the business.
• Two accounts are involved in the accounting for interest on capital which is Capital A/c and Interest on Capital A/c.
• It isn't permitted assuming that the expense is paid on a possible premise under segment 44AD or area 44ADA.
• Interest on capital is to be determined on the capitals toward the start for the pertinent period.
• Assuming there is any extra capital presented or capital removed during the year, it will cause a change in the capitals and interest is to be determined proportionately on the changed capitals for the important period.