PRC-1 · Chapter 10 · Question 46 of 100
How are 'Drawings' made by the owner treated in the financial statements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) As a deduction from the owner's Capital in the Equity section of the Statement of Financial Position.
Explanation
Drawings represent the owner taking value out of the business for personal use. It is not a business expense, but rather a direct reduction of the owner's equity (capital).
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