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WAEC Financial Accounting 2020 Question 3

Question 3

Partnership Accounts

The double entry for interest on drawings by a partner is: debit

  1. A.Partner's Current Account; credit Appropriation Account.
  2. B.Profit and Loss Account; credit Interest Account.
  3. C.Appropriation Account; credit Partner's Current Account.
  4. D.Interest Account; credit Profit and Loss Account.
Show the answer and explanation

Answer: A (Partner's Current Account; credit Appropriation Account.)

Explanation

Interest on drawings is charged to the partner (debit current account) and added to profit for sharing (credit appropriation).