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A B profit ratio is two to three. Net profit is thirty thousand and total interest on capital is fifty thousand. Deed is silent whether interest is charge. Under normal treatment how will A B get remaining profit or loss?

Answer and explanation

Correct answer: Interest proportionately up to thirty thousand and remaining profit zero

Normally interest on capital is appropriation and cannot exceed profit. So interest is allowed up to thirty thousand and remaining profit is zero.

Related tags

Insufficient ProfitInterest On CapitalNormal TreatmentProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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