passwella.
Menu

JAMB Principles of Accounts 2005 Question 41

Question 41

Partnership Accounts

Profit or loss in a partnership is usually arrived at after deducting from gross profit all expenses including

  1. A.partners' salaries
  2. B.interest on capital
  3. C.partners' drawings
  4. D.interest on loans
Show the answer and explanation

Answer: D (interest on loans)

Explanation

Interest on a partner's loan is an expense charged before net profit. Salaries and interest on capital are appropriations, and drawings are not expenses.