The interest on capital of a partner is credited to ________ account. (Fill in the blank by choosing correct option)
a) trading
b) profit and loss
c) partner's capital
d) cash
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profit or loss. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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Answer:
b) profit and loss
Explanation:
The interest on capital of a partner is credited to the Profit and loss A/c.
Capital interest is an expense to the company and is debited to the account of profit and loss appropriation. Interest is payable to partners and therefore the amount of interest is credited to the partner's capital account. No interest on assets will be permitted in the event of failure.
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