Practicing Success
If partnership deed provides interest on capital @ 6% p.a. and there is loss of ₹10,000 to firm, then what will be the interest on capital of partner? |
₹1,20,000 ₹1,00,000 ₹20,000 Zero |
Zero |
The correct answer is option 4- Zero. No interest is provided to partner because firm suffers loss, so the correct answer is option 4 i.e. zero. Interest is an appropriation of profit which is provided to partners only when the partnership deed agreed and firm earns profit. In this case, partnership deed agrees for interest on capital but firm suffers loss, so no interest on capital is provided to partners. |