The classification and normal balance of the drawing account are a. expense, debit balance b. expense, credit balance c. liability, credit balance d. owner's equity, debit balance

Question

Business

Sophia Knox

28 July, 17:24

The classification and normal balance of the drawing account are a. expense, debit balance b. expense, credit balance c. liability, credit balance d. owner's equity, debit balance

+1

Answers (1)

Know the Answer?

Gaven · Answer 1

The answer is D. owner's equity, debit balance

Explanation:

Drawing is the money or goods taken out from business by its owner. This act is usually common in partnership or sole proprietorship.

A drawing is not an expense, rather it is a reduction in owner's equity.

To credit owner's equity means to increase its equity and to debit owner's equity means to decrease or reduce its equity.

Since, drawing is a reduction in owner's equity, we debit owner's equity making option D. the correct answer.

Option A and B are wrong because drawings are not classified as an expense.

Option C is also wrong because a drawing is never a liability.