Difference between Drawings Against Profit and Drawings Against Capital
Difference between Drawings Against Profit and Drawings Against Capital
Basis |
Drawing Against Profit |
Drawing
Against Capital |
1. Where Debited |
It is debited to Drawings Account. |
It is debited to Capital Account. |
2. Part |
It is a part of expected profit. |
It is a part of capital. |
3. Effect |
It does not reduce capital. |
It reduces capital. |
4. Interest |
It is considered to calculate
interest on drawings. |
It is considered to calculate
interest on capital. |
Difference between Drawings Against Profit and
Drawings Against Capital
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