If interest on capital Rs 3000 is credited to appropriation account though it should be debited what is the effect on remaining profit?

Correct answer: Overstated by Rs 6000

Interest on capital is an appropriation of profit. In the appropriation account, it should be entered on the debit side because it reduces the profit left for distribution among partners. If an amount of Rs 3000 is wrongly entered on the credit side, the account is affected in two ways: the proper debit reduction of Rs 3000 is missing, and an incorrect credit increase of Rs 3000 is added.

Therefore, the remaining profit becomes higher than it should be by Rs 3000 + Rs 3000 = Rs 6000. Thus, the remaining profit is overstated by Rs 6000, so option A is correct. The error is not merely Rs 3000 because both the omitted debit and the wrong credit must be considered.