12th November 2019

accountingtools
10

Is a drawing account an asset?

The drawing account is not an expense - rather, it represents a reduction of owners' equity in the business. The drawing account is intended to track distributions to owners in a single year, after which it is closed out (with a credit) and the balance is transferred to the owners' equity account (with a debit).

Keeping this in consideration, what is the drawings in a balance sheet?

Drawings by the owner of the company will need to be recorded in the balance sheet as a reduction in the assets and a reduction in the owner's equity as an accounting record needs to be maintained to track money withdrawn from the business by its owners.

What type of account is a drawing account?

Yes, an owner's drawing account is a capital account. However, the drawing account is expected to have a debit balance, whereas the owner's main capital account is expected to have a credit balance. The drawing account will have a debit balance for two reasons.

What is a drawing in accounting?

A drawing account is an accounting record maintained to track money withdrawn from a business by its owners. A drawing account is used primarily for businesses that are taxed as sole proprietorships or partnerships.
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