Question

If the partners' capitals are fixed, where will you record interest charged on drawings?

Answer 1

If the partners' capital are fixed,then there are two accounts that need to be opened for recording the transactions. One is Capital Account and other is Current Account.

Capital Account records the introduction of capital and if there is any introduction of new capital and withdrawal of capital. It remains fixed year after year. Current account records all other adjustments.

So, interest on drawings will be recorded in the current account.