Free Guide to
Bookkeeping Concepts

Accounting Bookkeeping Concepts PDF Cover

Receive our free 18-page Guide to Bookkeeping Concepts (PDF) when you subscribe to our free newsletter.

You are already subscribed. This offer is not available to existing subscribers.
Step 2: Please check your email and click the confirmation link.

277,725
Subscribers

Is the drawing account a capital account?

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.