Question

The interest on drawings is transferred to ___________ side of the profit and loss account.

(a) debit
(b) credit
(c) asset
(d) liability

Answer 1

The interest on drawings is transferred to the credit side of the profit and loss account.

 

Explanation: Interest on drawings is a gain for the business and an expense for the proprietor. Since accounting records are maintained from a business point of view, it is credited to the Profit and Loss Account.