CA Foundation Exam > CA Foundation Questions > Cash of Rs. 2,000 is withdrawn for personal e...
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Cash of Rs. 2,000 is withdrawn for personal expenses. This will be debited to which account:
- a)Drawings A/c
- b)Creditors A/c
- c)Capital A/c
- d)Cash A/c
Correct answer is option 'A'. Can you explain this answer?
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Cash of Rs. 2,000 is withdrawn for personal expenses. This will be deb...
If you are withdrawing the money for personal use and also you withdrawing cash then journal entry is
drawings a/c Dr.
To cash a/c
A drawing account is an accounting record maintained to track money withdrawn from a business by its owners. A drawing account is used primarily for businesses that are taxed as sole proprietorships or partnerships.
A drawing account is an accounting record maintained to track money withdrawn from a business by its owners. A drawing account is used primarily for businesses that are taxed as sole proprietorships or partnerships.
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Cash of Rs. 2,000 is withdrawn for personal expenses. This will be deb...
Debiting the Drawings Account
When cash is withdrawn from the business for personal use, it is known as a drawings transaction. The Drawings Account is debited to record this transaction.
Explanation
The Drawings Account is a contra account to the Capital Account, which means it is subtracted from the Capital Account to calculate the balance. The purpose of this account is to record the amount of money withdrawn by the owner for personal use. It is important to keep track of this amount to accurately calculate the owner's equity in the business.
When cash is withdrawn for personal use, it reduces the amount of money available in the business. Therefore, the Cash Account is credited to reflect the decrease in cash. Simultaneously, the Drawings Account is debited to record the amount of money withdrawn by the owner.
The other options provided in the question, Creditors Account and Capital Account, are not relevant in this scenario. The Creditors Account is used to record the amount of money owed to suppliers, while the Capital Account reflects the owner's investment in the business.
Conclusion
In conclusion, when cash is withdrawn from the business for personal use, the Drawings Account is debited to record the transaction. This helps in accurately calculating the owner's equity in the business.
When cash is withdrawn from the business for personal use, it is known as a drawings transaction. The Drawings Account is debited to record this transaction.
Explanation
The Drawings Account is a contra account to the Capital Account, which means it is subtracted from the Capital Account to calculate the balance. The purpose of this account is to record the amount of money withdrawn by the owner for personal use. It is important to keep track of this amount to accurately calculate the owner's equity in the business.
When cash is withdrawn for personal use, it reduces the amount of money available in the business. Therefore, the Cash Account is credited to reflect the decrease in cash. Simultaneously, the Drawings Account is debited to record the amount of money withdrawn by the owner.
The other options provided in the question, Creditors Account and Capital Account, are not relevant in this scenario. The Creditors Account is used to record the amount of money owed to suppliers, while the Capital Account reflects the owner's investment in the business.
Conclusion
In conclusion, when cash is withdrawn from the business for personal use, the Drawings Account is debited to record the transaction. This helps in accurately calculating the owner's equity in the business.
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Cash of Rs. 2,000 is withdrawn for personal expenses. This will be debited to which account:a)Drawings A/cb)Creditors A/cc)Capital A/cd)Cash A/cCorrect answer is option 'A'. Can you explain this answer?
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