Question

Proprietor withdrew cash rs 7,000

Answer 1

Answer:

Before recording a journal entry, it is important to understand different types of accounts maintained under Book-Keeping & Accountancy and also three Golden Rules of Accounting.

From the point of view of business, the two accounts affected are Drawings (Owner’s a/c) and Cash a/c.

Drawings a/c is a representative personal account. It represents the account of the owner. Drawings will be debited in this case as the owner is the receiver (of cash). The Golden rule of personal accounts says 'Debit the receiver, Credit the giver'

Cash a/c is real account and will be credited in this transaction as cash is going out of the business under this transaction. The Golden rule of real accounts states 'Debit what comes in, Credit what goes out’.

Hence the journal entry will be

Drawings a/c ……………….…Dr

To Cash a/c

(Being cash withdrawn by proprietor)

I HOPE ITS HELPFUL TO YOU.