Question

Interest on partner’s loan is credited to ______.

Options

• Partner’s Fixed capital account

• Partner’s Current Account

• Partner’s Loan Account

• Partner’s Drawings Account

Answer 1

Interest on partner’s loan is credited to Partner’s Loan Account.

Explanation:

Interest on a partner’s loan is a charge against profit and must be paid even if the firm makes a loss. The interest amount is credited directly to the partner’s loan account, not to capital, current, or drawings accounts, since it relates to the loan given by the partner, not his ownership contribution.