A temporary contra equity account with a “debit balance” that decreases the typical “credit balance” of an owners’ equity capital account in an entity owned by one person (sole proprietorship) or two partners (or more). Drawing account is used to record withdrawal of cash or other assets made by an owner for its personal use during a financial year.

As a temporary account, it should have a zero balance at the beginning of next period. In other words, this account is closed by transferring the balance to an owners’ equity account at the end of the period.

Such withdrawals impact owner’s equity invested in the business. Therefore, it is very important to record such withdrawals in the accounts of a business, and on its balance sheet as a reduction in its assets and accordingly in the owner’s equity.