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UI Post-UTME Financial Accounting 2024 (Model questions) Question 3

Question 3

Accounting Equation

Where a proprietor withdraws cash from the business for his private use, the entries would be

  1. A.credit cash account, debit proprietor's account
  2. B.credit proprietor's account, debit cash account
  3. C.credit proprietor's account, debit drawings account
  4. D.credit cash account, debit drawings account.
Show the answer and explanation

Answer: D (credit cash account, debit drawings account.)

Explanation

Cash leaves the business (credit cash) and the withdrawal is recorded in drawings (debit drawings).