which of the following is true about the drawing account when the owner withdraws $300 for personal use on…

which of the following is true about the drawing account when the owner withdraws $300 for personal use on april 20th? this question is worth 1 point(s) it is debited because it behaves like an expense account it is credited because it increases owners equity it is debited because it increases liabilities it is credited because it decreases cash

which of the following is true about the drawing account when the owner withdraws $300 for personal use on april 20th? this question is worth 1 point(s) it is debited because it behaves like an expense account it is credited because it increases owners equity it is debited because it increases liabilities it is credited because it decreases cash

Answer

Brief Explanations:

The drawing account is used to record the owner's withdrawals for personal use. It is a contra - equity account. When an owner withdraws money for personal use, the drawing account is debited. Expense accounts are also debited when expenses are incurred. Since the drawing account has a similar debit - side behavior (as it reduces owner's equity, similar to how an expense reduces net income which in turn affects owner's equity), it can be thought of as behaving like an expense account in terms of the debit entry.

Answer:

It is debited because it behaves like an expense account.