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The deed says interest on partner's loan will be paid even if the firm has a loss. What is the nature of this interest?

Answer and explanation

Correct answer: Charge against profit

Interest on partner's loan is treated as an expense or charge for the firm. It may be payable even when there is no profit.

Related tags

Partner LoanCharge Against ProfitLoss SituationPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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