I have 2 very basic questions.
1. What is the difference between drawings and loan - say it is a firm? Is there a funda that beyond a limit the drawings becomes a loan?
2. What one can understand from the information "XYZ Loan A/c --------------100,000"? There is no information if this is Credit or Debit balance. Do we need to ask for the info dr. or cr. OR can we conclude that this is a credit balance?
Many thanks!
Dear Hema
As you asked Query one in which drawing excess from business can be teat as loan and answer is , in the partnership firm partner have a partnership deed in which explain the treatment of drawing , and what is the rate of interest would be charged on the drawing is a kind of loan which taken by Partner from partnership firm.
in 2nd query you will have to asked your client that is, any account which you consider , this account Dr or Cr Balance showing is loan & Advance or loan liablity, without proper information you can take only assumption and accounts are not prepare on the assumption basis
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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