The income statement of a proprietorship for the month of December indicates a net income of $75,000. During the same period, the owner withdrew $100,000 in cash from the business for personal use.
Would it be correct to say that the business incurred a net loss of $25,000 during the month?
No … the money withdrawn was either a loan to the owner or a draw down of the owners equity. Either way these are balance sheet transactions not P & L transactions.
No TweetBacks yet. (Be the first to Tweet this post)
January 18th, 2010 at 4:59 pm
No … the money withdrawn was either a loan to the owner or a draw down of the owners equity. Either way these are balance sheet transactions not P & L transactions.
References :
Over 25 years as a small business accountant.
January 18th, 2010 at 5:35 pm
You should start a business of your own
References :