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Answer Posted / donatus mugisha r.
Drawings could be of any form. There are drawings composed
of cash amounts taken away from a business by the
proprietor for personal use; there are drawings that could
be composed of goods(amounts of inventory) that was
initially bought in (purchased) for resale - referred to as
purchases. Drawings could also taken a form of a non-
current asset taken from a business for personal use. A
business owner can take these drawings in form of things
like a computer, a chair or even a car and transform its
initial use (in the business) into a new personal use.
Generally a drawing involves a proprietor of a business
taking something belonging to a business (his or her
business) and transform it into personal property for
personal use.
Accounting entry for drawings is as shown below
A. When it is a cash drawing
Dr. Drawings A/c
Cr. Cash A/c (To recognize the reduction in cash)
B. When it is drawing of an inventory
Dr. Drawings A/c
Cr. Trading A/C (deducted from purchases figure in the
trading account)
C. When it is of an asset
When the drawings are in
Dr. Drawings A/c
Cr. Asset A/c (To recognize the reduction in the asset
value)
The drawings account will be dealt with in the statement of
financial position to reduce the size of sharecapital.
| Is This Answer Correct ? | 27 Yes | 3 No |
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