Which of the following items is not an appropriation of profit for a limited company ?
'Debenture interest payable' is a contractual financial obligation representing the cost of borrowed capital and is therefore a charge against profits (debited to the…
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Which of the following items is not an appropriation of profit for a limited company ?
Answer and explanation
Correct answer C
'Debenture interest payable' is a contractual financial obligation representing the cost of borrowed capital and is therefore a charge against profits (debited to the Statement of Profit and Loss) that must be paid even if the company incurs a loss. By contrast, ordinary dividends, preference dividends, and transfers/provisions out of distributable surplus are appropriations of profit.
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UGC NET Commerce