When the interest on capital is allowed to partners, Interest on Capital Account is debited and Partner’s Capital Account is credited . It is called
When the interest on capital is allowed to partners, the Interest on Capital Account is debited and Partner’s Capital Account is credited. It is called
a) An opening Entry
b) A Closing Entry
c) A transfer Entry
d) An adjusting entry
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And – d)
Explanation:-
The transaction between the partners and the firm is carried out through an adjusting entry. As no cash transaction is required.
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