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WAEC Financial Accounting 2017 Question 35

Question 35

Partnership Accounts

Interest on partners drawings are debited in the

  1. A.partners current accounts and credited to the appropriation account.
  2. B.drawings account and credited to the profit and loss account.
  3. C.profit and loss account and credited to the partners current account.
  4. D.profit and loss account and credited to the partners drawings account.
Show the answer and explanation

Answer: A (partners current accounts and credited to the appropriation account.)

Explanation

Interest on drawings is charged to the partners (debit current accounts) and adds to profit to be shared (credit appropriation).