Yes, an owner's drawing account is a capital account. However, the drawing account is expected to have a debit balance, whereas the owner's main capital account is expected to have a credit balance.
The drawing account will have a debit balance for two reasons. First the draw or withdrawal by the owner reduces the capital account. Second, because each transaction involves a debit and a credit, and because a withdrawal of cash requires a credit to the Cash account, the owner's drawing account will need a debit for the same amount.
At the end of the accounting year, the debit balance in the drawing account is closed by transferring the debit balance to the owner's capital account.
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...