In preparing partnership accounts, interest on drawings is debited to current accounts and credited to?

A. Capital account
B. Appropriation account
C. Drawings account
D. Profit and loss account

Correct Answer: Option B

B. Appropriation account

Explanation

Interest on drawings is an income to the firm, and hence it is credited to the profit and loss appropriation account. On the other hand, interest on drawings is an expense to the partners, and hence it is debited to their capital accounts and credited to appropriation.