Question

How to treat interest on capital in accounting equations?

Answer 1

Answer:

Treatment of interest on capital in accounting equation will be as follow:  

In asset side, the amount of interest on capital paid will be deducted from bank or cash account. Since, the payment is done and it reduces the bank or cash balance.

Whereas, in liability side, amount paid for interest on capital will be deducted from expense head.

Hence, the result of above transaction will be Left Hand Side = Right Hand Side

Answer 2

Answer:

Hey friend here is your answer:-

In asset side, the amount of interest on capital paid will be deducted from bank or cash account. Since, the payment is done and it reduces the bank or cash balance. Whereas, in liability side, amount paid for interest on capital will be deducted from expense head.

Hope this answer helps you.

Please mark me as Brainliest ❤️❤️❤️❤️ ❤️.