PRC-1 · Chapter 3 · Question 17 of 100
What is the correct journal entry to officially close the 'Drawings' account of the proprietor at the end of the financial year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Owner's Capital, Credit Drawings
Explanation
Drawings represent a withdrawal of equity by the owner. To close the drawings account at year-end, the balance is transferred to the capital account by debiting Owner's Capital and crediting the Drawings account.
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