Question

Interest on drawings finally adjusted in------------ account

• A. Interest
• B. Capital
• C. Bank
• D. Trading

Answer 1

Answer:

B. Capital

Interest on drawings is charged to a partner for withdrawing money from the business for personal use. It reduces the partner’s capital, so it is adjusted in the Capital Account of that partner. Other options: Interest: This is a general heading, but the actual adjustment is in Capital. Trading Account: Only deals with revenue and direct expenses of business. Bank Account: Used for cash transactions, not for adjusting drawings interest.