Share Accounting Article below:

Drawings in Accounting – Definition and Explanation:

Drawings are the amounts taken by the owner of a business for his personal use in anticipation of profit. Drawings are usually made in the form of cash, but there could be other assets or goods withdrawn by the owner for his personal use. On the other hand profits earned by the business increase owner’s capital; drawings reduce the amount of capital on the other hand.

Accounting Treatment with Drawings:

In income statement, drawings are subtracted from the amount of purchase. In balance sheet, drawings are subtracted from capital at the end of accounting period.

Example:

drawings