Interest Paid on a Loan Provided by a Partner Should

question 35

Multiple Choice

Interest paid on a loan provided by a partner should be:

• A) a distribution of profit in the profit or loss distribution account.
• B) recognised as income for the partner who provided the loan.
• C) recorded as a prepayment in the balance sheet.
• D) recognised by the partnership as an expense.

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Definitions:

Cash Basis

An accounting method that records revenues and expenses when they are actually received or paid, respectively.

Operating Activities

Transactions and events that relate to the core business operations of a company, such as selling products, providing services, and incurring necessary expenses.

Cash Dividend

A financial disbursement by a corporation to its stockholders, typically from earnings distribution.

Sales Adjusted

A metric reflecting changes or modifications to sales figures for purposes such as accounting adjustments or performance analysis.