Joomla TemplatesBest Web HostingBest Joomla Hosting
Home Interest on Drawings


Interest on Drawings

To discourage too much drawing of cash from the business, a reasonable interest rate is imposed on each withdrawal. The interest rate is calculated from the date of withdrawal to the end of the financial year. The interest charged is a loss to the partners and is recorded by the following entry.

Debit capital account
interest on drawings account

The interest on drawings is a gain to the business and will be credited to the profit and loss account.

See also the rate of interest on drawings of each partner under the partnership agreement.

Last Updated (Thursday, 28 October 2010 15:56)