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1 mark

and are partners sharing profits in the ratio . The capitals introduced by and are ₹ and ₹ respectively. Interest on capital is allowed to partners The net profit of the firm for the year ending March 31st, 2025 is ₹ . Calculate the amount of Interest on Capital to be allowed to each partner.

  1. A
    ; ₹
  2. B
    ; ₹
  3. C
    ; ₹
  4. D
    ; ₹

Solution & Step-by-step Explanation

Let us first calculate the full interest due to both partners: However, the available profit is only ₹ . Since Interest on Capital is an appropriation of profit (and nothing mentions treating it as a charge), it must be restricted to the maximum extent of available profits.The available profits are distributed in the ratio of interest due to each partner:

Allocating the available profit of ₹ in this ratio:

Practice this question

Try it yourself before checking the explanation above.

and are partners sharing profits in the ratio . The capitals introduced by and are ₹ and ₹ respectively. Interest on capital is allowed to partners The net profit of the firm for the year ending March 31st, 2025 is ₹ . Calculate the amount of Interest on Capital to be allowed to each partner.
A
; ₹
B
; ₹
C
; ₹
D
; ₹

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