Question

Q4- How would you treat interest on capital on following cases:
(a) When the question is silent regarding charge/appropriation.
(b) When it is treated as a charge against profit
When it is treated as an appropriation of profits
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Answer 1

Answer:

1. no interest on capital is provided

2. it should be given to partner in aggred ratios even in case of loss

3. it should be given to partner in aggred ratios whenever firm is in profit.