Question

Us interest of loan a charge against profit an appropriation of profit??

Answer 1

Interest on partner's loan is a charge against profit and hence, will be debited to profit &loss a/c ,even if the firm incure a loss.

✓✓if a partner has given loan to the firm ,he is entitled to receive interest on such loan at agreed rate of interest. however,if there is no agreement as to the rate of interest , he is entitled to receive interest on loan @ 6% per annum.

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