What is a drawings in accounting terms?

What is a drawings in accounting terms?

Drawing, in accounting, refers to the action of taking funds from an account or company holdings for individual use. Business owners typically use drawing accounts when they are a part of a sole proprietorship or partnership. Drawing can also include items that are removed from a business for personal use.

Is a drawings an asset or liability?

NO. Drawings are the opposite of capital, and such as they are not liabilities! Drawings means that the owner is pulling back his investment in assets.

What type of account is a drawings?

The Drawing Account is a Capital Account Since the capital account and owner’s equity accounts are expected to have credit balances, the drawing account (having a debit balance) is considered to be a contra account.

Is drawings an asset in accounting?

The definition of the drawing account includes assets, and not just money/cash, because money or cash or funds is a type of asset. It is a current asset of the company and is one of the many assets that can be withdrawn from the business by the owner(s) for their personal use.

What are drawings in financial statements?

Drawings are money or other assets taken out of a business. This might be by the owner or partner for personal use, or as dividends if the company has been made public. Drawings are different from expenses or wages, which are business costs.

Are drawings an asset?

Drawings are neither liability nor an asset, as it is a contra entry it involves the owner’s capital account and drawings account.