Question

If the owner of business withdrawals money for personal use but in performing a bank reconciliation determines that she had neglected to record the withdrawal what accounting entry would be necessary?

Answer 1

Debit withdrawals; credit cash is the correct answer.

What are drawings in accounting?

• A drawing bank is not in and of itself a bank account.
• Drawing in accounts are the records kept by a company owner or auditor that show how much cash has been taken by business owners.
• These are transfers made for personal use rather than for the profit of the business, yet they are governed in a way that employee earnings are not.
• Because these transfers must be offset against the owner's equity, accurate records must be maintained.
• A separate drawings directly deals with it simpler to keep track of these actions and balance the books at the conclusion of every fiscal year when you need to know how to end your drawings account.

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