Drawing is an asset for the business therefore it wil come under the head [b]Real Accounts.[/b] Understand in this way that business has to pay back the amt of capital (money invested by the proprietor) to the proprietor on closure therefore it is a liability 4 business .Now think opposite that proprietor withdrew some amt for personal use therefore it wil be liability for bs. [b]RULES[/b][u][/u][face=Geneva][/face] [color=blue]NOMINAL:all expenses:Dr all incomes:Cr REAL All assets:Dr All liabilities:Cr
Personal Dr the receiver Cr the giver
Deferred revenue exp r a kind of capital asset.b/c u have to write a portion of it every year.
Drawing is an asset for the business therefore it wil come under the head [b]Real Accounts. Understand in this way that business has to pay back the amt of capital (money invested by the proprietor) to the proprietor on closure therefore it is a liability 4 business .Now think opposite that proprietor withdrew some amt for personal use therefore it wil be liability for bs. [b]RULES NOMINAL:all expenses:Dr all incomes:Cr REAL All assets:Dr All liabilities:Cr
Personal Dr the receiver Cr the giver
Deferred revenue exp r a kind of capital asset.b/c u have to write a portion of it every year.
drawing is a personal account as it reprasants capital account. while deffered expenditure is a real account as it a asset of company, which they have done to use later. this is best upto my knowlegde and i will welcome any further discussion or debate..
how u can say that drawing is a personal A/c .capital is the amt invested by a (person) Proprietor/partner etc in his business. If u remember Accounting entity concept it says that an accounting entity is held to be "separate and distinct from its owners." In other words, according to this assumption, the business and its owners possess diff identity.we think from the pt of view of business & not the proprietor.
Therefore business has to return the same amt to the proprietor therefore it is the liability for the business. Therefore capital is the liability towards owners .
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