How do you treat owners drawings on your chart of accounts? which accounts are affected?
Answer:
You create a "Drawings account" which will normally have a debit balance but be located in the equities section of your balance sheet as a deduction from your capital+reserves. The accounts affected when you draw a sum are this Drawing account (debit) and the mode of payment account i.e. cash/bank (credit).
Your net worth after drawings would be equal to
Initial capital + reserves/profit from previous years - drawings
All three should be shown separately to provide accurate information about the goings on in the company. Other Questions and Answers: