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The deed provides both interest on capital and interest on drawings. How will they affect the Profit and Loss Appropriation Account?

Answer and explanation

Correct answer: Interest on capital debit and interest on drawings credit

Interest on capital is allowed to partners so it is debited. Interest on drawings is received by the firm so it is credited.

Related tags

Appropriation AccountInterest On CapitalInterest On DrawingsPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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