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If interest on capital is debited in Profit and Loss Appropriation Account but not credited to partner account what is the effect on capital account?

Answer and explanation

Correct answer: Partners capital will appear lower

If partner account is not credited the partners claim will not increase. Therefore capital appears lower by the interest amount.

Related tags

Interest On CapitalPosting OmissionCapital AccountCapital AccountsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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