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The firm wrongly debited interest on partner's loan (₹12000) to the profit and loss appropriation account. What is the correct rectification?

Answer and explanation

Correct answer: It should be transferred to profit and loss account

Interest on partner's loan is a charge against profit. It should be debited to profit and loss account, not appropriation account.

Related tags

PartnershipAdjustmentsLoan Interest TreatmentPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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