PRC-1 · Chapter 8 · Question 34 of 100
The proprietor withdrew Rs. 10,000 in cash for personal use. This was correctly recorded in the cash book but debited to the Miscellaneous Expenses account. What is the correcting journal entry?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Debit Drawings Rs. 10,000, Credit Miscellaneous Expenses Rs. 10,000
Explanation
Personal withdrawals are Drawings. By recording it as an expense, profit is falsely reduced. The correction transfers the debit from Miscellaneous Expenses to Drawings.
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