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What is Interest on Capital? Give one reason why it is allowed to partners.

Anurag Pathak
April 9, 2023
[CBSE] Fundamentals of Partnership Firm, Accountancy Class 12th

2.76K viewsApril 9, 2023[CBSE] Fundamentals of Partnership Firm Accountancy Class 12th

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Anurag Pathak30.76K April 9, 2023 0 Comments

What is Interest on Capital? Give one reason why it is allowed to partners.

Anurag Pathak Changed status to publish April 9, 2023

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Anurag Pathak30.76K Posted April 9, 2023 0 Comments

Answer:-

Interest on Capital means the interest on the partner’s capital. It is a distribution of part of the profit in the capital ratio.

Interest on capital is allowed to compensate those partners who have contributed more capital than the other partners.

Anurag Pathak Changed status to publish April 9, 2023

Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.