Question

Where is the Interest in drawings recorded in the Current Account?

Options

• Debit side

• Credit Side

• Not recorded

• Recorded as a footnote

Answer 1

Debit side

Explanation:

In the context of a partnership firm, when a partner withdraws money for personal use (i.e., drawings), the firm may charge interest on drawings.

• This interest on drawings is an income for the firm and a loss/expense for the partner.

• Therefore, it is debited to the partner’s current account.