Question

interest on capital add​

Answer 1

Explanation:

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Answer 2

Explanation:

The amount of interest that is charged on the capital is an indirect expense of the business. ... This is an expense of the business, which will be recorded on the debit side of the Profit and Loss Account. Also, it is the income of the owner, which will be added to the Capital Account in the Balance Sheet...

= Interest on Capital has the following two effects on final accounts:

• It is an expense of the business, therefore; it will be recorded on the debit side of Profit and Loss Account.
• On the other hand, it is an income of the owner, therefore; it will be added in the Capital Account in Balance Sheet.

= 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.

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