Closing the drawings account to Capital is not necessary if profit is greater than owner's drawings during the period.

Name: Closing the drawings account to Capital is not necessary if profit is greater than owner's drawings during the period.
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Question

Quizplus · Accepted Answer

The drawings account needs to be closed to the Capital account regardless of whether the profit is greater than the owner's drawings during the period, as it reflects the owner's withdrawals from the business, which reduces the owner's equity.

Closing the Drawings Account to Capital Is Not Necessary If