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Interest on capital Rs 45000 was deducted from net profit as expense. Actually it was appropriation. What should be done in profit distribution correction?

Answer and explanation

Correct answer: Increase net profit and show debit in appropriation

Interest on capital is appropriation not expense. Remove the Profit and Loss Account error and debit it in appropriation account.

Related tags

Interest On CapitalError CorrectionAppropriationProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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