If interest on capital is not debited in appropriation account by mistake how will remaining profit appear?

Correct answer: It will appear higher

Interest on capital is an appropriation of profit, not an ordinary operating expense. In the Profit and Loss Appropriation Account, it is placed on the debit side because it is an amount assigned to partners before the remaining profit is divided. The remaining profit is found after subtracting such appropriations.

If the interest is accidentally omitted, the subtraction does not take place. Consequently, the balance left for distribution appears higher than it should be by exactly the amount of interest omitted. For example, if profit is ₹50,000 and interest is ₹5,000, the correct balance is ₹45,000, but omission shows ₹50,000. Hence option A is correct; it does not automatically create a loss or have no effect.