Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 23 - No. 9)
What is the accounting treatment for interest paid to a partner on their capital account?
It reduces the partner's capital account.
It is an expense on the income statement.
It is a distribution of profit.
It is debited to the partner's drawings account.
Explanation
Interest on capital is an expense, impacting net profit or loss.
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