If the partner’s capitals are fixed, in which account interest charged on drawings will be credited?
If the partner’s capitals are fixed, in which account interest charged on drawings will be credited?
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In Case of Fixed Capital Method. The interest on drawings are debited to partners current account.
In the Fixed Capital Method, All Transactions of Revenue (Current) Nature are recorded in separate account called current account.
Note:- Current transactions refers to the transactions of recurring (repeated) nature.
For example, interest on partners capital, drawing salary, commission to the partners are of revenue nature. All such transactions are recorded in Current Account.
In Capital Account only Additional capital and permanent withdrawals are recorded.
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