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Theres this concept that if the owner is paying its income from shares or interest on any investment which is personally owned by the owner and do not have any relation with business, then it will go to drawings account on the credit side.
But my question is why it is not treated as additional capital invested in business?
There is one example in BPP text where the owner sells his personal yatch and the proceedings from which is added to capital.?
I am confused as what is treated as additional capital and what is credited to drawings a/c.There is no rule, and it doesn’t matter whether you add it to capital or subtract it from drawings – the end result will be the same.
Usually large amounts would be added to capital and small amounts subtracted from drawing, but again there is no rule. (‘Rules’ only apply to limited companies.)
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