How to Withdraw Amount from Business | Drawing Entry

There are two ways to withdraw amount from business:

1. Deduction from capital account

You can create following journal entry:

Debit: Drawings
Credit: Cash/Bank

(Being cash withdrawn by proprietor)

Open drawings account under Capital A/c. Drawings account is to be shown as a deduction from Capital Account in the Balance Sheet.

2. Treat drawings as indirect expense

You can create following Expense entry:

Debit: Drawings
Credit: Cash/Bank

Open drawings account under Indirect Expenses. After saving this transaction, Net Profit gets reduced accordingly.