Drawings or withdrawals by a sole proprietor will affect the company's balance sheet through the reduction of the asset withdrawn and a reduction in owner's equity.
A draw of cash will also be reported in the financing activities section of the statement of cash flows. (If an asset other than cash is withdrawn, it is reported as supplemental information on the statement of cash flows.)
The income statement is not affected by the owner's draw.
To learn more, see the Related Topics listed below:
After working as an accountant, consultant, and university accounting instructor for more
than 25 years, Harold Averkamp formed AccountingCoach in 2003. His goal was to
share his knowledge and passion for teaching accounting with people throughout the
world at a very low cost. Read More...