Why partners capital is debited when interest on drawing is recieved?
Please answer is...
1 Replies
Asha Kanta Sharma
(Manager - Finance & Accounts)
(36383 Points)
Replied 04 May 2020
Interests on Drawings is an indirect income for an organization and is credited in the books of accounts. On the other hand since partners generally don't pay to the organization in the form of cash or bank against such interest income, their capital account is DEBITED and Interest on Drawings Credited with the said amount.
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