But Personel ac- dr-receiver and cr-giver Real a/c-- dr-what comes in and cr- what goes out Drawings means something is taken away by the prpritor.. so Drawings should be the real ac ...
06 July 2010
Hi Gorthi, as per entity concept, business is considered as different from the proprietor/s. that is the reason why his own investment into the business is shown as a liability for business eventhough internal. Proprietor's capital A/c represents capital invt. by him into business. when capital is introduced, we pass the following entry : Cash/ Bank/ asset A/c Dr. XX To Capital A/c XX The word capital represent capital invested by the proprietor (a person). Instead of writing his name, we represent him by writing capital A/c hence the rule "credit the giver " is followed when we credit capital A/c. Thus capital A/c is a representative personal A/c. the same rule is followed in case of drawings. Regards, CA Shakuntala Chhangani
CAclubindia
