Question

Why salary, commission, interest on drawings are recorded in cr. Side on the partner current account

Answer 1

Answer:

Charging interest on drawings is a means of discouraging partners from withdrawing excessive amounts from the business. From this, it follows that interest on drawings is a debit entry in the partners' current accounts and a credit entry in the Appropriation Account.

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Answer 2

Explanation:

Charging interest on drawings is a means of discouraging partners from withdrawing excessive amounts from the business. This will mean that the entries for the share of the residual profit will be a credit in the Appropriation Account (thus resulting in a nil balance) and debits in the partners' current accounts.