Interest on capital in

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1359 Points Posted on 30 October 2021
why we record interest on capital in sole proprietorship in profit and loss account although interest on capital is appropriation of profit ??
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On 30 October 2021 at 10:34 Report
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This discussion clarifies the accounting treatment of interest on capital in a sole proprietorship. While typically an appropriation of profit, it's recorded in the profit and loss account for sole traders as it's considered a business expense. A separate profit and loss appropriation account isn't needed as there are no partners to share profits.

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My grammar is 💯 good I
7306 Points Posted on 30 October 2021

Incomes and expenses must be reported in the income statement. The profits are apportioned through profit sharing ratio. It is a business expense.

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On 30 October 2021 at 14:26
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1359 Points Posted on 30 October 2021
Can we prepare profit and loss appropriation in sole proprietorship firm??
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On 30 October 2021 at 14:31
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My grammar is 💯 good I
7306 Points Posted on 30 October 2021

No need. There are no partners and no need to distribute profits.

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On 30 October 2021 at 18:39
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Chartered Accountant
24588 Points Posted on 31 October 2021
Agree with yasaswi
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On 31 October 2021 at 06:04
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CA
10436 Points Posted on 01 November 2021
I also agree
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On 01 November 2021 at 21:17
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Chartered Accountant
24588 Points Posted on 02 November 2021
Thank you
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On 02 November 2021 at 14:10

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