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The deed says interest on capital will be allowed as expense before profit. If net loss is Rs 30000 and interest on capital is Rs 20000 what is the effect on total loss?

Answer and explanation

Correct answer: Total loss will be Rs 50000

Due to special deed clause interest is treated like expense. Loss becomes Rs 30000 plus Rs 20000 equal to Rs 50000.

Related tags

Special ClauseInterest On CapitalLossProfit DistributionPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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