In which of the following accounts is interest on partners capital found?
A. Profit and Loss B. Trading C. Income surplus D. Profit and Loss appropriation
Correct Answer: D
Explanation
The main intention of preparing a profit and loss appropriation account is to show the distribution of profits among the partners. It is debited with interest on capital and remuneration to partners and credited with the net profits b/d from the profit and loss account and interest on drawings.