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Interest on partner loan was already deducted while calculating net profit. Still it was debited in appropriation account by fifteen thousand rupees. What is the effect on distributable profit?

Answer and explanation

Correct answer: It will be understated by fifteen thousand rupees

Interest on partner loan is a charge and has already been deducted. Deducting it again understates distributable profit by fifteen thousand.

Related tags

Partner LoanDouble DeductionErrorProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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