Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 22 - No. 6)
How does interest on capital affect a partner's share of profits?
It decreases their profit share.
It increases their profit share.
It has no effect on their profit share.
It affects their drawings instead.
Explanation
Interest on capital affects the net income, and is often decided upon before the profit is determined.
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