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.

Question

Quizplus · Accepted Answer

Interest paid on a loan provided by a partner is recognized as an expense by the partnership, as it is a cost incurred for borrowing funds.

Interest Paid on a Loan Provided by a Partner Should