why drawings are assets for the business?
Answers
Answer:
The drawing account is an accounting record used in a business organized as a sole proprietorship or a partnership, in which is recorded all distributions made to the owners of the business. ... Thus, a drawing account deduction reduces the asset side of the balance sheet and reduces the equity side at the same time.
Answer
Drawings are neither assets nor liability it is a personal expense. As we know a businessman starts his business with cash and capital, But before generating the profit, he can easily take money from business. That means he takes money for personal use it is not an asset for business
Suppose an example
He withdrew a cheque of 2 ,00,000 for personal use
Here you can see he is taking for money for using in family not in business
Personal things are completely different form business That's why we named it drawings as it is using in our home purpose and Drawings are personal expense.
It is not an asset because it does not give benefit to business. Businessman gets only personal benefit from drawing.
It is not a liability of business. Capital is the liability of business. If a businessman take his own capital in the form of drawing, it will just decrease of liability of business.