If the business has provided Unsecured Loan to friends/relatives.
Is it compulsory to charge Interest on that Loan every year?
Or that same amount can be remain outstanding.
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Unsecured Loan
Replies (3)
In case of relatives loan can be with or without interest
Drawing means cash or goods withdrawn from the business by the proprietor for personal use. It reduces the capital of the proprietor. Interest on drawings will be charged from the partner’s capital account, only if it is mentioned in the partnership deed. If partnership deed is silent, no interest on drawings will be charged. According to the business entity concept interest on drawings will be treated as income for the business and loss for the partners.
Yes it can be. No issues
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