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The deed allows interest on capital at ten percent. Profit before interest is only Rs 20000 and total interest is Rs 30000. How much interest will be allowed?

Answer and explanation

Correct answer: Rs 20000 proportionately

Interest on capital cannot exceed available profit because it is profit appropriation. Distribute the available profit proportionately.

Related tags

Interest On CapitalInsufficient ProfitNumericalPartnership DeedPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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