Question

. Which of the following will be treated as drawings : (A) Withdrawing money for payment of salary to employees (B) Withdrawing money for payment to creditors (C) Withdrawing money from business for private expenses (D) Withdrawing money for purchase of asset

Answer 1

Answer:

(C) Withdrawing money from business for private expenses

Explanation:

Drawings are assets such as cash or credit card, or cheque taken from a business by the owner for private expenses. It's referred to as a withdrawal account. It reduces the proprietor's overall capital investment.

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Answer 2

1. Drawings are assets taken from a business by the owner for personal use, such as cash, a credit card, or a cheque.
2. It is known as a withdrawal account.
3. It lowers the proprietor's total capital investment.
4. Thus, withdrawals from a business for personal expenses are treated as drawings.

Hence, option C is correct.

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