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If interest is added to the retiring partner's loan account but not debited to Profit and Loss Account, which effect will be wrong?

Answer and explanation

Correct answer: Expense understated and profit overstated

Liability increased on one side but expense was not recorded. Exam tip: complete the double effect.

Related tags

Double EntryErrorProfit LossPartner's Loan AccountPartner S Loan AccountReconstitution Retirement Or Death Of A PartnerAccountancyClass 12 Mcq

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