The drawing account
A) appears on the income statement along with the expenses of the business.
B) must show transactions every accounting period.
C) is increased with debits and decreased with credits.
D) is not a proper subdivision of owner's equity.

Question

Quizplus · Accepted Answer

The drawing account is a temporary equity account that shows the withdrawals made by the owner(s) for personal use or other non-business related purposes. It is increased with debits (when the owner withdraws money) and decreased with credits (when the owner deposits money back into the business). It is not a subdivision of owner's equity as it represents the owner's temporary withdrawals. It is also not shown on the income statement, as it does not affect the profit/loss of the business.

The Drawing Account