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Model Paper 1 — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyModel Paper 11 Mark
MCQ
How drawing against capital is differ from drawings against profit:
  • A
    Drawings against capital will not be recorded at all
  • ✓
    Drawings against capital will reduce the capital
  • C
    Drawings against capital will effect current account
  • D
    Drawings against capital will reduce the profit
✓

Answer

Correct option: B.
Drawings against capital will reduce the capital
(b) Drawings against capital will reduce the capital
Explanation:
The main difference between drawings against profit and drawings against capital is:
i. Drawings against capital will reduce the amount of capital but not the profit because it is withdrawn from capital only.
ii. Drawings against profit will reduce the amount of profit but not the capital.

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