Question : Interest on capital to partners and the agreed rate will be paid out of:
Option 1: Profits of the current year
Option 2: Accumulated profits of past year
Option 3: reserves
Option 4: average profit of last three years
Answer (1)
17th Jan, 2024
Correct Answer: Profits of the current year
Solution : Profits of the current year will be utilized to distribute interest on capital to partners at the agreed rate. Hence the correct option is 1.
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