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WAEC Financial Accounting 2015 Question 35

Question 35

Partnership Accounts

In which of the following accounts is interest on partners capital found?

  1. A.Profit and Loss.
  2. B.Trading.
  3. C.Income surplus.
  4. D.Profit and Loss appropriation.
Show the answer and explanation

Answer: D (Profit and Loss appropriation.)

Explanation

Interest on capital is a sharing of profit, so it is debited in the profit and loss appropriation account.