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An interest on capital is an expenditure of the partnership firm.

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State whether the following statement are True or False.

An interest on capital is an expenditure of the partnership firm.

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  • True
  • False
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1 Answer

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True.

Explanation: Money invested by the partners in a business is regarded as partners’ capital. Any interest paid on such capital will be an income for the partners and an expense for the firm. Hence, the above statement is true.

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