Drawing account in case of Individauls

A/c entries 318 views 2 replies

Hello Friends, Happy Deepawali to all. I am maintaining the accounts of individuals and directors. I want to know what a Drawing account and what sort of transactions are entered in this account. Also, under which head does it come?

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Drawing account is like a temporary account used in accounting to record drawings or withdrawals made by the proprietor or partners of a business for their personal use, 

Transactions entered in this account typically include: 

CAsh withdrawals by the proprietor /partners

Goods taken by the proprietor /partners for personal use 

In terms of accounting heads, the Drawing account comes under the "Capital " or "Proprietor's Capital" head. It is a contra account to the capital account, meaning it reduces the capital of the proprietor / partners when they withdraw money or goods 

A Drawing Account is a personal account used to record money or goods withdrawn by an individual, proprietor, or partner for their personal use from the business. It represents the owner’s withdrawals and is not an expense of the business.

In the case of individuals or directors, transactions such as:

  • Cash or goods taken for personal use,

  • Personal expenses paid out of business funds,

  • Income tax paid on behalf of the proprietor/director, etc.,
    are recorded in the Drawing Account.

At the end of the accounting year, the balance in the Drawing Account is transferred to the Capital Account, reducing the owner’s capital.

Head: It falls under the Capital Account (Owner’s Equity) section in the balance sheet.


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