Drawings Example: Non-Cash Assets
(Office Supplies)

by Sandra
(Australia)

Q: If an owner withdraws $200 of office supplies for personal use is this a decrease in office supplies AND a decrease in owner's equity?

withdrawing drawings inventory supplies


A:
Yes it is.

Anytime any assets are withdrawn from the business for personal use, this is definitely a decrease to those assets in the business and also a decrease to owner's equity.

The name for a decrease in owner's equity due to withdrawing assets is drawings.

The most common asset that is withdrawn from a business is cash, but an owner can actually withdraw any asset.

Although this represents a decrease to owner's equity, we use a separate account (not capital) to record this, called (you guessed it) drawings.

The journal entry for this transaction would be:

DR Drawings (decrease in equity) ..............$200
CR Office supplies
(asset) ..................................$200

As you can see, the debit to decrease owner's equity is made to the account drawings.

Hope this drawings example with a non-cash asset makes sense.

Feel free to add your say in the comments below.

Best,
Michael Celender
Founder of Accounting Basics for Students


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