What is the interest on partners capital for partners?
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interest on capital is an expense to the firm and is debited to the profit and loss appropriation account. interest is payable to the partners and hence, the partners capital account is credited with amount of interest in case of loss, no in case will be allowed on capital.
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Interest on Partner's Capital
Payment of Interest must be authorized by the partnership deed and It should be related to the period of the partnership deed. If there is another partnership deed for another period then such deed's provisions will be considered for that period. The rate of interest should not exceed 12%.
Explanation:
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