Accountancy basics

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Iqbal Singh (Querist)
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25 August 2011 Under the modern approach, any increments in the following accounts: assets, liabilities, income, capital, expenses are taken in the order >> debit, credit, credit, credit, and debit.
With regards to the above, if we journalize the following event: Mr.X withdrew 500 in cash from his business for personal use, the entry will be:

Drawings A/C Dr. Rs.500
To Cash A/c Rs.500
Here cash, an asset decreases, and hence is being credited. Why is Drawings being debited? Is it because capital is decreases as a consequence of the above mentioned event? And why is the Drawings A/C taken in lieu of Capital A/C? Why don’t we simply debit the Capital A/C?

I am a novice in accountancy and commerce.
Hence kindly forgive me if my question is too babyish.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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25 August 2011 yes. capital & drawings are related to only owner of the business so drawing need to be adjusted in capital accounts only

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