How would you close the partner’s Drawings A/C?
(a) By transfer to capital or current A/C debit side (b) By transfer to capital A/C credit side (c) By transfer to
current A/C credit side (d) Either ‘b’ or ‘c’.
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Answer:
A. By transfer to capital or current A/C debit side.
Explanation:
The drawing account is a temporary owner equity account, it must be closed at the end of each accounting year. The account is also a contra account to owner's equity, so the drawing account's debit balance is contrary to the expected balance of an owner equity account. The drawing account is closed directly to the capital or current account.
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