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

Answer 1

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 It is the charge/fee that a partner needs to pay to the firm in lieu of the amount withdrawn by him/her for personal use.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.