what is the treatment of interest on capital in. accounting equation?
Answers
Answered by
69
Treatment of interest on capital in accounting equation will be as follow:
In asset side, the amount of interest on capital paid will be deducted from bank or cash account. Since, the payment is done and it reduces the bank or cash balance.
Whereas, in liability side, amount paid for interest on capital will be deducted from expense head.
Hence, the result of above transaction will be Left Hand Side = Right Hand Side
Similar questions