Drawings
This query is : Resolved
04 March 2016
Why interest on drawings is deducted from capital ? being an income,
04 March 2016
Dear
yes you are right that the interest on drawings is an income but I want to tell you few things first.
1. Partner and the partnership firms are different persons in eyes of law.
2.Interest on drawings is income for the firm that's why it is credited in P&L a/c as income.
3. Interest on drawings is to be paid by the partners, so thats why it is deducted from the partners capital.
yes you are right that the interest on drawings is an income but I want to tell you few things first.
1. Partner and the partnership firms are different persons in eyes of law.
2.Interest on drawings is income for the firm that's why it is credited in P&L a/c as income.
3. Interest on drawings is to be paid by the partners, so thats why it is deducted from the partners capital.
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06 March 2016
Thank you very much sir.
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