The interest on partners' loans is?
Debited in current account
Credited in profit and loss account
Debited in profit and loss account
Credited in current account
Correct answer is C
Interest on partners' loan to the firm is a charge against profit. Such interest is to be allowed whether there are profit or not. So, interest as a partners' loan is credited to his loan account and later on it is transferred to the debit of profit and loss account.