Target Exam

CUET

Subject

-- Accountancy Part A

Chapter

Accounting for Partnership

Question:

When Interest on Drawing is charged by a partnership firm, it will be the ________________of the firm.

Options:

Income

Expense

Liability

Loan

Correct Answer:

Income

Explanation:

The correct answer is option 1- Income.

When Interest on Drawing is charged by a partnership firm, it will be the income of the firm.

Interest on drawing is an income for the firm and is payable by the partners to the firm hence it is debited to their partner's account. This amount increases the firm's profit.