interest on capital in terms of accounting equation
Dear Student
Interest on capital is an Expense for the business but at the same time it is Income of the owner therefore in accounting equation it shall be deducted as expense but it shall also be added as it is income which would increase capital balance, Therefore in all, interest on capital won't have any effect in the accounting equation.
Regards
Interest on capital is an Expense for the business but at the same time it is Income of the owner therefore in accounting equation it shall be deducted as expense but it shall also be added as it is income which would increase capital balance, Therefore in all, interest on capital won't have any effect in the accounting equation.
Regards