An owner's drawing account is the full name of the drawing account, the ledger account in which a sole proprietorship or partnership records the cash and other assets the owner takes for personal use. Each partner in a partnership has a separate drawing account.
How the account works
The owner's drawing account is a contra owner's equity account, so it normally carries a debit balance. Each withdrawal is recorded with a debit to the drawing account and a credit to Cash or the asset taken. Keeping withdrawals in a separate account lets the owner see at a glance how much has been taken out during the year, without changing the capital account entry by entry.
The account is temporary. At the end of each year one of the closing entries debits the owner's capital account and credits the drawing account for its full balance, bringing it back to zero for the new year. If the owner drew $25,000 during the year, capital falls by $25,000 at closing.
Because withdrawals are distributions to the owner rather than costs of running the business, the drawing account never appears on the income statement. Its balance is shown on the statement of owner's equity, where it is subtracted from beginning capital plus investments and net income to arrive at ending capital. In a corporation, the comparable distributions to owners are dividends.