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Subjects
Class 12AccountancyPartnership Accounts - Basic ConceptsCapital AccountsHard
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Under fluctuating capital method interest on capital was wrongly credited twice. What will be the correct effect?

Answer and explanation

Correct answer: Partners capital will be overstated by the extra interest amount

Interest on capital is a credit item and recording it twice overstates capital. The extra credit should be removed in correction.

Related tags

Interest On CapitalErrorFluctuating CapitalCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq
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10 more MCQs
  1. 1If the deed gives ten percent interest on capital and capital was introduced after six months, what is necessary in calculation?
  2. 2If a partner pays personal expenses through the firm and the deed does not allow it, how is it generally treated?
  3. 3A deed states that capitals will be fixed. In such a case, where are additional capital and drawings generally recorded?
  4. 4The deed requires equal capitals but at year end one partner's capital is short. An entry to bring the shortage will affect which account?
  5. 5What does a partners capital account mainly show?
  6. 6For whom are capital accounts generally prepared in partnership?
  7. 7Under fixed capital method which change is generally recorded in the capital account?
  8. 8Under fluctuating capital method where is share of profit credited?
  9. 9Under the fixed capital method, to which account is a partner’s salary credited?
  10. 10Under the fluctuating capital method, drawings are debited to which account?
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