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Chapter 16. Recording Owners' Equity > Recording Owners' Draws

Recording Owners' Draws

When owners take money out of a company that is not a corporation, the money is either classified as a loan or a draw. A draw account is an owner account that is increased by the earnings of the company and decreased by the amount of money the owner takes out of the company. Non-corporations need to set up a draw account for each owner. You might want to create a master equity for all owners and then a subaccount under the master account for each individual owner's draw. Classify draw accounts as equity accounts.

Set Up a Draw Account

Press Ctrl+A to open the Chart of Accounts.

Press Ctrl+N to open the New Account window.

Select Equity as the account type.

Enter a name for the account.

Indicate whether this is to be a subaccount of another account.

Enter an optional description.

Click OK to save the account.


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