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Drawings

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(Querist)
04 March 2016 Why interest on drawings is deducted from capital ? being an income,
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Ankur Singhal

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Ankur Singhal (Expert)
04 March 2016 Dear
yes you are right that the interest on drawings is an income but I want to tell you few things first.
1. Partner and the partnership firms are different persons in eyes of law.
2.Interest on drawings is income for the firm that's why it is credited in P&L a/c as income.
3. Interest on drawings is to be paid by the partners, so thats why it is deducted from the partners capital.
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G.Ravi Sankar Sagar

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G.Ravi Sankar Sagar (Querist)
06 March 2016 Thank you very much sir.
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