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Posting in ledger_drawings

A/c entries 273 views 2 replies

Vinay B L

IPCC Student

49 Points Joined January 2019

Dear Members,

I have a vague doubt. I understand that the drawings will be reduced from the capital account. When the proprietor draws the money as drawings the effect would be on drawings account as well as cash account. Why the same is not reduced in the capital account when actually, it is a reduction from the capital? Kindly clarify.

Thanks & Regards

Vinay B L

Replies (2)

mansi r sharma

student

67 Points Joined March 2014

Drawing accounts are used in the sole proprietor and partnership firm business. Now why this account is created bcoz to track how much is the owners drawing from the business. It is one type of Contra account. Later at the end of the year drawing account balance are closed and transferred to owners capital account.. Bcoz basically it is the reduction of owners equity from the business.