Practicing Success
Interest on Capital is allowed on which capital to a partner in a partnership firm? |
Average capital Opening capital Closing capital Capital remain invested in the business |
Capital remain invested in the business |
The correct answer is option 4- Capital remain invested in the business. Interest on capital is to be calculated on the capitals at the beginning for the relevant period. If there is any additional capital introduced or capital withdrawn during the year, it will cause change in the capitals and interest is to be calculated proportionately on the changed capitals for the relevant period. |