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Cpt

Yamini dugar (Student CA IPCC) (240 Points)

13 May 2016

In a partnership firm,if a firm does not have sufficient profits and there is a agreement for interest on capital or advances so will the get their interest or will the firm only give them profits.

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3 Replies

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 13 May 2016

Actual profits comes after charging such interest to Statement of Profit & Loss Account.

so u have to charge such interest in your books.

and if all partners giver their consent for not paying Interest then it is OK.

But the Term Profit is after charging such interest. so how can u distribute profit before paying interes or charging interest.

Vinay somani (CA, CS) (Assistant Manager-Accounts) (549 Points)
Replied 13 May 2016

Actual profits comes after charging such interest to Statement of Profit & Loss Account. so u have to charge such interest in your books. and if all partners giver their consent for not paying Interest then it is OK. But the Term Profit is after charging such interest. so how can u distribute profit before paying interes or charging interest.

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