Drawings

[Andrew Sackville-West]

On Thu, Mar 26, 2009 at 11:34:52PM +0000, Chris Dennis wrote:
> Hello folks
> 
> I run a small business and use GnuCash to do the sums.
> 
> What's the best way to account for 'Drawings', i.e. the money that I 
> take out of the business?

I have Equity:Capital Accounts:Contributions and E:CA:Distributions. I
use the latter for draws.

> 
> I've been using an account called Equity:Owner's Equity:Drawings, and 
> transferring money from my bank account and petty cash as required. 
> That's fine, but the amount in the Drawings account just keeps getting 
> bigger and makes the balance sheet meaningless.
> 
> I should probably close that account at the end of each year, but what 
> should I close it into?  I don't want previous years' drawings to show 
> up on this year's balance sheet or income statement.

My accountant provides me with adjusting journal entries every year to
be entered on 12/31/previous-year and one of those is always writing
Eq:CA:Dist down against Equity:Retained Earnings. BUt IANAA!!

A
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