Question:
For the firm, interest on partner's drawing is a/an
For the firm, interest on partner's drawing is a/an
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Interest on drawings is considered income for the firm as it is charged on the capital withdrawn by the partners.
Updated On: Sep 1, 2025
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Correct Answer: 3
Solution and Explanation
Step 1: Concept of interest on drawings.
Interest on drawings refers to the amount paid by the partner to the firm for the use of capital withdrawn from the firm.
Step 2: Accounting treatment.
Interest on drawings is considered an income for the firm, as the firm earns it from the partner.
Step 3: Conclusion.
Thus, the correct answer is (C) Income. Final Answer: \[ \boxed{\text{Income}} \]
Interest on drawings refers to the amount paid by the partner to the firm for the use of capital withdrawn from the firm.
Step 2: Accounting treatment.
Interest on drawings is considered an income for the firm, as the firm earns it from the partner.
Step 3: Conclusion.
Thus, the correct answer is (C) Income. Final Answer: \[ \boxed{\text{Income}} \]
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Top Questions on Interest
- Explain any one method of calculation of interest on drawings.
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