Question

Select the most appropriate alternatives from those given below

Drawing account is closed by transferring the balance to the ___________ account
a) Drawing
b) Liabilities
c) Assets
d) Capital

Answer 1

Drawings account is closed by transferring the balance to the Capital account.

Explanation:
Drawings Account is closed by transferring the balance to the Capital Account. It will reduce the capital of the proprietor. It is the amount withdrawn or goods taken by the proprietor from the business for his/her personal use. Hence, the Drawings Account is closed by transferring the balance to the Capital Account, i.e. it is deducted from the Capital Account on the Liabilities side of the Balance Sheet.