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Interest on Drawings-Withdrawn in the Beginning of Every Month

State whether...

Question

State whether the following statements are True or False.

The interest on drawings is an income of the partnership firm.

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Solution

True
Explanation: Interest on drawings is a kind of fee charged from the partner on the amount withdrawn by him/her from the firm’s money for his/her personal use. So, it is an expense for the partner and accordingly, an income for the firm. Hence, the given statement is correct.

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Interest on Drawings-Withdrawn in the Beginning of Every Month

Standard XII Accountancy

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