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A and B have capitals of Rs 40,000 and Rs 60,000 respectively. If interest on capital is 5% what will be the total interest?

Answer and explanation

Correct answer: Rs 5000

Total capital = Rs 40,000 + Rs 60,000 = Rs 100,000. Total interest = Rs 100,000 × 5% = Rs 5,000. Option C (Rs 6,000) is incorrect because it equals 5% of Rs 120,000, which is not the total capital here. Exam tip: either calculate interest for each partner separately (40,000×5% and 60,000×5%) or add capitals first and apply the percentage once.

Related tags

Interest On CapitalPartnership AccountsCapital AccountNumericalCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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