Owner's drawing account definition
/What is the Owner’s Drawing Account?
The owner's drawing account is used to record the amounts withdrawn from a sole proprietorship by its owner. This is a contra equity account that is paired with and offsets the owner's capital account . At the end of the fiscal year , the balance in this account is transferred to the owner's capital account, thereby setting the drawing account balance to zero to begin the next fiscal year.
The amounts taken from a business and recorded in the owner’s drawing account may be intended by the owner as a replacement for other forms of compensation .
Presentation of the Owner’s Drawing Account
The owner's drawing account is not presented as a separate line item on the balance sheet. Instead, it is deducted from the owner's capital account in the equity section. On the balance sheet, the net effect is shown as a reduced ending balance in the owner's capital, reflecting the cumulative impact of contributions, earnings, and withdrawals.
