Difference between Drawings Against Capital and Drawings Against Profit.
Are you looking for the difference between drawings against capital and drawings against profit.
Here are the below differences between both.
Basis | Drawings Against Capital | Drawings Against Profit |
Where Debited | It is debited to capital account | It is debited to drawings account |
Part | It is against Capital | It is against expected profit. |
Effect | It reduces capital | It does not reduce capital |
Interest on Drawings | It is not considered for calculating interest on drawings | It is considered for calculating interest on drawings |
Interest on Capital | It is considered for calculating interest on capital | It is not considered for calculating interest on capital |