Is Drawing an Expense or Revenue

 If you have enrolled newly in commerce class. You have the doubts in your mind. Whether drawing is an asset or liability and sometime, you think drawing is expense or revenue. I already told, drawing is neither asset nor liability in my past content. I told you that drawing is the personal expense. An business think as expense of business. Now, again question, drawing can be revenue. 

So, Again explain

Drawing is Expenses

Drawing can not be revenue because when the business owner took the goods from the business or took cash from business. Business's capital decrease. Suppose, Mr. A is owner of ABC company. He invested his capital of Rs. 5,00,000. He has stock of Rs. 3,00,000. He  need stock of Rs. 2,00,000 for personal use. He will use it for his daughter marriage. 

 So, he took it. Now, stock has decreased with rupees Rs. 2,00,000 and capital has decreased with Rs. 2,00,000. From this example, we not seeing that any profit comes in the business by giving personal stock of Mr. A for his daughter marriage. So, it is expense of business. We can simple words. It decrease both asset and liabilities. 

Exception : Drawing can be revenue 

Instead of individual business, if you have partnership firm, then

If there have the condition, if any partner withdraw money or stock, he has to pay 10% pa interest upto return of same capital. 

Now, in this time, drawing is not expense. It becomes an asset of firm. That is called drawing asset. It is just like loan investment of firm and firm will get interest on drawing which also include in the amount of drawing. Interest on drawing will revenue of business.