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Value of goods drawn by proprietor should be credited to:
- a)Capital Account
- b)Sales Account
- c)Drawings Account
- d)Purchases Account
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
Value of goods drawn by proprietor should be credited to:a)Capital Acc...
The correct option is D.
The goods taken by the proprietor for personal use, reduce the inventory of the business. Hence, it is placed on a temporary drawings account. It reduces the Owner's equity account. It is not an expense of the business.
The goods taken by the proprietor for personal use, reduce the inventory of the business. Hence, it is placed on a temporary drawings account. It reduces the Owner's equity account. It is not an expense of the business.
Most Upvoted Answer
Value of goods drawn by proprietor should be credited to:a)Capital Acc...
Explanation:
When a proprietor draws goods from the business for personal use, it is treated as a purchase of goods for personal use. Therefore, the value of goods drawn by the proprietor should be credited to the Purchases Account.
In accounting terms, the Purchases Account is a nominal account that records the cost of goods purchased for resale or for use in the business. When the proprietor draws goods for personal use, it is treated as a purchase made by the business on behalf of the proprietor. Therefore, the value of goods drawn by the proprietor should be credited to the Purchases Account.
Other options such as Capital Account, Sales Account or Drawings Account are not appropriate in this case because:
- Capital Account is used to record the owner's investment in the business, not the value of goods drawn for personal use.
- Sales Account is used to record the revenue earned by the business from the sale of goods or services, not the value of goods drawn by the proprietor.
- Drawings Account is used to record the amount of cash or assets withdrawn by the proprietor for personal use, not the value of goods drawn for personal use.
In summary, the value of goods drawn by the proprietor should be credited to the Purchases Account because it represents the cost of goods purchased for personal use by the proprietor.
When a proprietor draws goods from the business for personal use, it is treated as a purchase of goods for personal use. Therefore, the value of goods drawn by the proprietor should be credited to the Purchases Account.
In accounting terms, the Purchases Account is a nominal account that records the cost of goods purchased for resale or for use in the business. When the proprietor draws goods for personal use, it is treated as a purchase made by the business on behalf of the proprietor. Therefore, the value of goods drawn by the proprietor should be credited to the Purchases Account.
Other options such as Capital Account, Sales Account or Drawings Account are not appropriate in this case because:
- Capital Account is used to record the owner's investment in the business, not the value of goods drawn for personal use.
- Sales Account is used to record the revenue earned by the business from the sale of goods or services, not the value of goods drawn by the proprietor.
- Drawings Account is used to record the amount of cash or assets withdrawn by the proprietor for personal use, not the value of goods drawn for personal use.
In summary, the value of goods drawn by the proprietor should be credited to the Purchases Account because it represents the cost of goods purchased for personal use by the proprietor.
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Community Answer
Value of goods drawn by proprietor should be credited to:a)Capital Acc...
Firstly entry are
DRAWING A/C DR.
TO PURCHASE A/C
so it means that when owner take goods from business it is decreasing so that's why we credit purchase A/c.
DRAWING A/C DR.
TO PURCHASE A/C
so it means that when owner take goods from business it is decreasing so that's why we credit purchase A/c.
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Value of goods drawn by proprietor should be credited to:a)Capital Accountb)Sales Accountc)Drawings Accountd)Purchases AccountCorrect answer is option 'D'. Can you explain this answer?
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