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what impact does interest on drawings/capital have on accounting equation? explain with egs..

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what impact does interest on drawings/capital have on accounting equation?
explain with egs..
Answered Same Day Dec 23, 2021

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David answered on Dec 23 2021
114 Votes
What impact does interest on drawings/capital have on accounting equation?
Explain with egs.
Accounting equation is a mathematical expression of relationship between assets
and liabilities. It defines or explains the effect of each transaction on assets, liabilities
and stockholder’s equity.
Impact of interest on capital on accounting equation:-
Capital introduced in the business is in investment by the shareholder and an
obligation on the company on which interest is to be paid by the company
First impact is that interest on capital being a charge on the...
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