Question
Download Solution PDFCash withdrawn by the proprietor for his personal use should be debited to
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Drawings account.
Key PointsWhen cash is withdrawn by the proprietor for his personal use, it is called a "draw" and should be debited to the drawing account.
Important PointsWhenever proprietor withdraws cash and goods from a business for their personal use, it is treated as a drawing.
The journal entry is as follows :—
| S. No | Particulars | L.F | Dr. | Cr. |
| Drawings A/c Dr. | ||||
| To Cash A/c | ||||
|
(Being cash withdrawn for personal use) |
Confusion Points
When the proprietor or partner withdraws cash from the business for personal use, the amount is debited to the drawings account and credited to the cash account.
At the end of the accounting period, an adjustment entry is passed to transfer the balance of the drawings account to the capital account.
Last updated on May 6, 2025
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