Meaning of Drawings
What is Drawing?
Sir, that picture that we used to learn in childhood used
to make a picture of camel and used to make a picture of
pigeon cat or dog
Bro, that has become your childhood drawing
Now where are you kids?
Now you want to become an accountant
Now you have come in the accounting line
You are going to become an expert accountant
So the meaning of drawing changes in the accounts
When money is given to the business by the owner
This is called Capital Investment
And when money is taken out from the business by the owner
for their household use
This is called Drawings
Drawings The owner gives something to the business from his
pocket
Capital The owner takes something from the business and
keeps it in his pocket
Drawings That means we can say
Capital and Drawings are opposite of each other
Yes, we can say
Capital and Drawings are opposite of each other
What is written in Drawings?
It is the amount of cash or goods withdrawn from the
business
Sir, you just said
Capital is investment and money is withdrawal
Drawings But here goods are also written
So yes
If you invest in goods
For example
You opened a T-shirt shop
Your business is a T-shirt readymade garment
You invested some money or cash in it
So this is also capital
And you also invested some T-shirts in your house
It was a new trick to sell
So this is Capital Investment in the form of goods
Capital Investment can also be done in cash
Capital Investment in the form of goods can also be done
Capital can also be invested in cash
And capital can also be invested in goods
In exactly the same way
If the owner withdraws money, it will become Drawings of
Cash
And if the owner takes the business T-shirts to his house
Then it will become Drawings of Goods
That is also a Drawing
Okay And It is the amount of cash or goods withdrawn from
the business by the proprietor in case of a proprietorship
business
And by partners in case of a partnership business
That is
If a single business is a single business
Then the one who will withdraw cash or goods will be called
Drawings
And if there are more than two partners in a partnership
business
If they are drawing something of cash or goods
Then that will also be called Drawings
Any of the two partners will be called Drawings
Such an amount reduces the amount of investment or capital
of the owners in the business
Okay, for their personal use it is written
Yes, you know, for household use, money or goods are
withdrawn
Such an amount reduces the amount of investment or capital
of the owners in the business
Whatever cash you withdraw or goods you withdraw
This reduces your capital
Why? If you take out the amount of investment in the
business and take it home, won't that money be less?
You invested one lakh rupees
You told the business that this is the business of one lakh
rupees
Okay, tomorrow you drew twenty thousand out of it
So tell me brother
Now you are telling the business that this is the business
of one lakh rupees
No, no, the capital is reduced, you took twenty thousand
out of it
So your capital is reduced by the amount of drawings
Okay Therefore, it is shown as a deduction from the capital
of the proprietor and partner while preparing the balance
sheet
That's why
That's why what we do
We minus the drawings from the capital
When we make a balance sheet
In the balance sheet, capital is written on the top
left-hand side
From that capital, we minus the drawings
Because drawings reduce the amount of our capital
That's why we minus from the capital in the balance sheet
Any other item that increases or decreases our capital
Net profit or net loss
If it is net profit, it is added to the capital
It increases your capital
The business earned money from your money
You are saying that you earned more from my capital
Increase my capital
Yes The business says that the capital money is yours and
the profit money is also yours
We have to take the total from you
That's capitalism
Net profit plus
And if it is lost
The business says that your capital is lost
It reduces the capital
If it is lost, then the business says that your capital is
lost
That's why net loss is reduced from the capital
Yes sir, I understand what you are saying
So remember the crux at the end
Investing money or investing goods is capital
Taking out money or taking out goods is drawings
Capital and drawings are opposite of each other
Thank you