The owner's drawing account is closed by debiting
A) the owner's drawing account and crediting the owner's capital account.
B) the owner's capital account and crediting the owner's drawing account.
C) Income Summary and crediting the owner's drawing account.
D) the owner's drawing account and crediting Income Summary.

Question

Quizplus · Accepted Answer

Closing the owner's drawing account means transferring its balance to the owner's capital account. To do this, the owner's capital account should be debited (increased) and the drawing account should be credited (decreased). Option B correctly represents this journal entry. Option A and D would be incorrect as they do not increase the capital account. Option C is incorrect as Income Summary is not used to close drawing accounts.

The Owner's Drawing Account Is Closed by Debiting