Home› Accounting› Accounting Technical Support

Which Equity account to use for Profit Withdrawals?

honghong Member Posts: 11

Hi there,

Say the owner has withdrawn $1000 profit, which of the attached screenshots would be correct?

Thanks!

in Accounting Technical Support

Comments

  • JamieDJamieD Administrator Posts: 1,156 admin

    Hey @hong. Now I'm not an accounting expert, but I do feel as though it really depends on what you are A ) Using the funds for, and B ) Your business type. As far as I know, if you are taking funds from the Owner's Investment/Drawings account, you would be simply taking money out of the account that you've already invested in (for something like personal use). As for the Owner's Equity account, this would technically be for profit that you would be paying yourself. I think that perhaps @Mikeg would have some insight on this as well.

    edited May 10, 2019
  • MikegMikeg Member Posts: 995 ✭✭✭

    Hong,
    I believe I gave some guidance on this in your prior post. However, I'm in the US and only familiar with accounting and tax in the US. Here in the US, if an owner of an unincorporated entity withdraws funds from the business they are shown as an owner draw. In addition, keeping it as a draw allows you to determine cumulative draws over time.
    Mike G, CPA
    www.mgfinancial.net

Sign In or Register to comment.