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If interest on drawings is credited to the appropriation (profit distribution) account, what will be the corresponding effect in the partner's account?

Answer and explanation

Correct answer: Debit in partner account

Interest on drawings is recoverable from the partner and treated as income for the firm, so it is credited to the appropriation (profit distribution) account. By double-entry bookkeeping the corresponding entry is a debit to the partner’s account (showing the partner owes the amount). Option B is wrong because crediting the partner’s account would imply the firm owes the partner (opposite effect). Option C would apply only if the interest were actually paid into bank/cash at that time; here it is merely credited to appropriation, so the partner’s account is debited. Option D is incorrect because debiting profit account does not record the recoverable amount from the partner. Exam tip: use the double-entry pair — appropriation credited → partner debited for interest on drawings.

Related tags

Double EntryInterest On DrawingsPartner AccountAppropriation AccountAdjustmentsPartnership Accounts Basic ConceptsAccountancyClass 12 Mcq

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