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The owner's drawing account is used to record the amounts withdrawn from a sole proprietorship by its owner.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.