Partnership account | Interest on capital | Interest on drawing

Описание: Partnership account | Interest on capital | Interest on drawing

Welcome to Commerce Shruti! In this video, we will explain the concepts of Interest on Capital and Interest on Drawings, essential elements in partnership accounting.

Interest on Capital: It is a reward given to partners for investing their capital in the business. This amount is calculated as a percentage of the partner's capital balance and is treated as a charge against the profits of the business.
Interest on Drawings: This is the amount charged to partners for withdrawing money or goods from the business for personal use. It ensures fairness among partners by adjusting for the use of business funds.
We’ll cover:

The calculation methods for both.
Their accounting treatment in partnership accounts.
The impact on profit distribution among partners.
By the end of this video, you will understand how these concepts help maintain equity in partnership firms. Ideal for Class 11 students and those preparing for accounting exams!

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