Appropriation Accounts and Current Accounts Help.....

System

I am revising for my unit 5 simulation and exam, and i need some help with the interest on capital and the interest on drawings.

If there is interest in capital, do you subtract that from the profit or do you add it to the profit?

and its the same for the drawings as well, do you subtract that from the profit or do you add it to the profit?


Regards

System

Re:Appropriation Accounts and Current Accounts Help.....

interest on Capital subtract it from the profits and credit the partners current a/c


Interest on Drawings you add to the profits and debit the partners current a/c.

Drawings you debit the current a/c only.