Knowee
Questions
Features
Study Tools

Interest on drawings is deducted fromChoose one optionCapital A/cExpense A/cIncome A/cOther liability A/c

Question

Interest on drawings is deducted fromChoose one optionCapital A/cExpense A/cIncome A/cOther liability A/c

🧐 Not the exact question you are looking for?Go ask a question

Solution

The correct answer is Capital A/c.

Here's why:

  1. Drawings refer to the money withdrawn by the owner of the business for personal use. It reduces the owner's equity in the business.

  2. Interest on drawings is the amount charged on the owner for withdrawing money from the business. It is considered as an income for the business and a loss for the owner.

  3. Therefore, the interest on drawings is deducted from the Capital Account (Capital A/c) because it reduces the owner's equity in the business.

So, it is not deducted from Expense A/c, Income A/c, or Other liability A/c.

This problem has been solved

Similar Questions

Chhavi and Neha were partners in a firm sharing profits and losses equally . chhavi withdraw a fixed amount at the beginning of each quarter. Interest on drawings is charged @ 6% p.a. At the end of the year, interest on Chhavi's journal entry for charging interest on drawings. drawings amounted to 900. Pass necessary journal entry for charging internet on drawing

Interest on capital is added toChoose one optionExpense A/cIncome A/cCapital A/cGoodwill A/c

A liability requiring a series of payments to the lender is referred to as a(n):Multiple ChoiceInvestment note.Debenture.Discounted note.Installment note.Indenture.

Who is primarily liable on a promissory note?a.Holderb.Endorserc.Makerd.Drawee

The payment of a liability decreases both assets and liabilitiesGroup of answer choicesTrueFalse

1/1

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.