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Interest on capital n interest on drawings

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11 May 2012 hello sir i hav a doubt on int on capl and int on drawings.which is income and which is expense?
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
11 May 2012 Interest on capital is PAID to the partner. Accordingly it is an expense for the firm.

Interest on drawings is CHARGED/RECEIVED from the partner. Accordingly it is an income for the firm.

Reverse will be treatment in the books of the partner.

Interest on capital will be income and interest on drawing shall be expense.
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