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Goods worth Rs. 10,000 were withdrawn by the proprietor for his personal use. The account to be credited is
- a)Sales A/c
- b)Drawing A/c
- c)Purchases A/c
- d)Expenses A/c
Correct answer is option 'C'. Can you explain this answer?
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Goods worth Rs. 10,000 were withdrawn by the proprietor for his person...
When the proprietor withdraws goods for personal use of Rs 10,000 it should be credited/deducted from the stock while calculating cost of goods sold and hence are deducted from purchases.
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Goods worth Rs. 10,000 were withdrawn by the proprietor for his person...
Explanation:
Withdrawal of Goods for personal use:
When the proprietor withdraws goods for personal use, it is considered as a withdrawal of assets from the business.
Account to be credited:
The account to be credited for the withdrawal of goods for personal use is the Drawing Account.
Drawing Account:
The Drawing Account is a temporary capital account that records the withdrawals of assets by the proprietor for personal use. It is a contra equity account and is credited when the proprietor withdraws assets from the business.
Reason for crediting Purchases Account:
The Purchases Account is not credited for the withdrawal of goods for personal use because purchases represent goods acquired for resale or for use in the business, and the withdrawal of goods for personal use does not fall under this category. Hence, the Purchases Account is not affected by the withdrawal of goods for personal use.
Therefore, in this case, the Drawing Account should be credited when goods worth Rs. 10,000 are withdrawn by the proprietor for his personal use.
Withdrawal of Goods for personal use:
When the proprietor withdraws goods for personal use, it is considered as a withdrawal of assets from the business.
Account to be credited:
The account to be credited for the withdrawal of goods for personal use is the Drawing Account.
Drawing Account:
The Drawing Account is a temporary capital account that records the withdrawals of assets by the proprietor for personal use. It is a contra equity account and is credited when the proprietor withdraws assets from the business.
Reason for crediting Purchases Account:
The Purchases Account is not credited for the withdrawal of goods for personal use because purchases represent goods acquired for resale or for use in the business, and the withdrawal of goods for personal use does not fall under this category. Hence, the Purchases Account is not affected by the withdrawal of goods for personal use.
Therefore, in this case, the Drawing Account should be credited when goods worth Rs. 10,000 are withdrawn by the proprietor for his personal use.
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Goods worth Rs. 10,000 were withdrawn by the proprietor for his personal use. The account to be credited isa)Sales A/cb)Drawing A/cc)Purchases A/cd)Expenses A/cCorrect answer is option 'C'. Can you explain this answer?
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