Question

What is interest on capital?​

Answer 1

Answer:

Interest on Capital meaning

In other words, interest on capital is the interest paid to owners for providing a firm with the required capital to start a business. It is similar to obtaining a loan from any financial institution. The partners are paid interest on the capital that remains outstanding.

Example: Interest on Capital @ 6% p.a. on ₹30,000 for the whole year can be calculated as under: Interest on Capital= (30,000*6*12)/100*12= 1,800 or directly=6% of 30,000 (for full year). Sometimes Opening Capital is to be calculated from Closing capital, for calculating Interest on Capital.

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Answer 2

Answer:-

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1. Every business owner will be looking out for getting a return money invested in the business in the form of a fixed rate interest or deposited. This is known as the interest on capital.

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