Drawings is the term used in the context of partnership, it refers to that amount or goods which the partners has withdrawn from the business. Interest on drawing is levied on outstanding amount and it will be charged until the individual repay back to the company and therefore from the point of view of the business it is considered as income, the reason being that according to business entity concept, the company and owners of the firm are considered to be different person and not same and therefore any personal transaction of the owner is to be treated as transaction from outside party in the books of accounts. Given below is the journal entry for interest on drawings –
Drawing Account Dr
To Interest on drawing account
As one can see that business will get income in the form of interest that is the reason why it is credited.