Why interest on capital is taken as charge against profit in this question??

Dear Student

Interest on capital is taken as a charge against profit only if it is specified in the question, else interest on capital is always taken as the appropriation of profit.
Therefore in your question, it must have been specified that interest on capital shall be treated as a charge against profit.

Hope this helps

  • 2
Bcoz capital is our asset & charge on the assets are expense . thtas why it is expense and it comes against the profit
  • -1
Ioc is always taken as appropration of profit and not charge against profit . And it should be shown in p&l and not p&l app acc.
  • -1
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