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A partner’s loan account carries interest at 4.25% per annum on ₹4,00,000. What will be the interest for one year?

Answer and explanation

Correct answer: ₹17,000

Interest for one year = Principal × Rate = ₹4,00,000 × 4.25/100 = ₹17,000. The ₹16,000 option would result from using only a 4% rate, so it is the closest distractor but incorrect. In an exam, convert the percentage to a decimal or fraction before calculating: 4.25% = 0.0425.

Related tags

Partner Loan AccountInterest CalculationRetirement Of PartnerPartnership AccountsClass 12 AccountancyPartner's Loan AccountPartner S Loan AccountReconstitution Retirement Or Death Of A Partner

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