Q396
Interest on drawings is ___ for the business
A.
Loss
B.
Expense
C.
Gain
AnswerD.
None of the above
Answer: Option C
Solution
Answer: Option C
Solution:
Interest on drawings is gain for the business. Interest on drawings is an income to the firm, and hence it is credited to the profit and loss appropriation account. On the other hand, interest on drawings is an expense to the partners, and hence it is debited to their capital accounts.