Difference between drawing against profit and drawing against capital
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Difference between drawings against profit and drawings against capital:-
→ Drawings against profit are debited to Drawings Account. Drawings against capital are debited to Capital Account.
→ Drawings against profit are against expected profit for the year whereas drawings against capital are against capital, as the name says.
→ For calculating interest on drawings, drawings against profit are considered. Drawings against capital aren't considered during the calculation of interest on drawings.
→ Drawing against profit isn't considered during the calculation of interest on capital whereas drawings against capital are considered when calculating the interest on capital.
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