Answer Posted / h.r. sreepada bhagi
There can not be interest on Capital.
In case of a company, interest can be paid on loan from
banks, financial institutions or others including directors.
Since it's the cost of borrowed funds, it's charged to the
P&L A/c as an expense. Return on capital is paid to the
shareholders in the form of dividend and not interest.
In the case of partnership firms again, interest can be paid
on funds borrowed from banks, partners, financial
institutions or others and the cost of the funds so borrowed
is treated as expense. The partners' get share of profit of
the firm as per the 'Partnership Deed' as return on the
capital put in by them. However if the firm has received
money and is maintaining Partners' Current A/cs, interest
can be given on this & needs to be charged off to P&L A/c.
In case of proprietorship concerns also, interest paid on
borrowed sums should be treated as expense of the period to
which it relates. The profit earned by it is the return on
capital invested by the Owner/Proprietor/Proprietress.
| Is This Answer Correct ? | 3 Yes | 4 No |
Post New Answer View All Answers
what are the purpose for the preparation of cost centre ?
what is the uniform public construction cost accounting act?
Explain Cash Basis of accounting
What is DECR And for wt it is used?
What Kind Of Requirements for Vat Refund And Assessment Cases
Expand-----RTD
what are the accounting ratios
What is the rate of basic excise duty and specific duty And I want to know that how can I see that vat rate in up ,excise duty and tds details Please tell me site plese
• What are the types of cash flows?
Where we show Service Tax Due ( Debit Balance ) in Balance Sheet?
what is cost audit?
Raju put labour charges bill for Rs 65000/- You are directed to deduct 5% security deposit and 1.15% TDS from the bill. Pass journal entry for it
I have complited my ERP course in FICO module. Now I want to work in ERP package. Please suggest me how I will apply for the organisation works in ERP environment.
Define The Term Journal And Explain The Present Day Use?
Truck # 3 has a list price of 16000. It is acquired in exchange for a computer system that company A caries in its inventory. The computer system cost 12000 and is normally sold by company A for 15200. Pass the journal for the same.
