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Interest on drawings is deducted fromChoose one optionCapital A/cExpense A/cIncome A/cOther liability A/c

Question

Interest on drawings is deducted from

Choose one option

  • Capital A/c
  • Expense A/c
  • Income A/c
  • Other liability A/c
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Solution

The correct answer is Capital A/c.

Here's why:

  1. Drawings refer to the money withdrawn by the owner of the business for personal use. It reduces the owner's equity in the business.

  2. Interest on drawings is the amount charged on the owner for withdrawing money from the business. It is considered as an income for the business and a loss for the owner.

  3. Therefore, the interest on drawings is deducted from the Capital Account (Capital A/c) because it reduces the owner's equity in the business.

So, it is not deducted from Expense A/c, Income A/c, or Other liability A/c.

This problem has been solved

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