Complete the sequence where interest on capital has to be provided as per partnership deed, but available profits are not sufficient to provide full amount of Interest on capital.
A. If it is appropriation, calculate interest on capital for all partners at given rate
B. Divide the available amount in the capital ratio among the partners
C. Calculate ratio between capital of partners
D. Consider the partnership deed and decide whether interest on capital is a charge or an appropriation
E. Consider the available profit
Choose the correct answer from the options given below:
Complete the sequence where interest on capital has to be provided as per partnership deed, but available profits are not sufficient to provide full amount of Interest on capital.
A. If it is appropriation, calculate interest on capital for all partners at given rate
B. Divide the available amount in the capital ratio among the partners
C. Calculate ratio between capital of partners
D. Consider the partnership deed and decide whether interest on capital is a charge or an appropriation
E. Consider the available profit
Choose the correct answer from the options given below:
Solution
The logical sequence begins by checking the deed (D) to know if interest on capital is a charge or appropriation. If appropriation, calculate full interest for all partners (A). Then check available profit (E). Since profit is insufficient, calculate capital ratio (C) and finally distribute the available amount in capital ratio (B). Hence the correct order is D, A, E, C, B.
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2022: 15 July Shift 2