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Question
Select the most appropriate alternative from those given below and rewrite the statement.
The interest on drawings is transferred to__________________ side of partner’s current account.
Options
debit
credit
asset
liability
Solution
The interest on drawings is transferred to debit side of partner’s current account.
Explanation: Interest on drawings is an expense for a partner. It is the charge/fee that a partner needs to pay to the firm in lieu of the amount withdrawn by him/her for personal use. It leads to a decline in the capital balance of the partner. Thus, it is transferred to the debit side of Partner’s Current Account.
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