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Drawing Account should be in which GL Category?

posted Jul 2, 2009, 10:49 PM by Unknown user   [ updated Sep 2, 2009, 7:46 PM ]
  • Drawing Account is an account that records the withdrawal from the business either in the form of goods, cash or assets for his private use.
  • Definition of Sole Proprietor:
    • Form of business with only one owner.
    • Takes all the profits and bear all the losses.
    • For example, an owner takes money from the business to pay for his rental, car or utilities. The withdrawals will then, be record in the Drawing Account.
  • Create a new GL Code - drawingAccount (Asset)
  • Initially, Issue PV (for cash) or Add JTxn (for asset):

 Debit Drawing Account
 Credit Cashbook / Asset

  • Subsequently, at the end of accounting period :
 Debit Capital (to reduce owner's equity)
 Credit Drawing Account