Multiple choice

If there is insufficient profit, what should be the treatment of interest on capital?

  1. It should be totally disallowed.

  2. It should be totally allowed irrespective of the insufficiency of profits.

  3. It should be allowed to the extent of profits in their profit sharing ratio.

  4. It should be allowed to the extent of profits in their capital ratio.

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is the correct answer.