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The deed says interest on capital is to be calculated on opening capital. Why is closing capital not the proper base?

Answer and explanation

Correct answer: Because the deed fixes opening capital as the base

The base stated in the deed prevails. Closing capital may include profit and drawings and may give wrong interest.

Related tags

Opening CapitalInterest On CapitalDeedPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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