State two differences between interest on capital allowed to partners and interest on drawings charged from partners.
State two differences between interest on capital allowed to partners and interest on drawings charged from partners.
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Answer:-
i) Interest on capital is allowed (paid) by the firm to the partners whereas interest on drawings is charged by the firm.
ii) Interest on drawings is credited to Profit and Loss Appropriation Account and interest on capital is debited to Profit and Loss Appropriation Account.
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