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Anything the owner takes out of business is called drawings, doesn’t matter what he/she calls it wages or interest.
But its only applicable in sole proprietorship right?what in case she opens a limited company, where she holds all the shares and there she give herself a salary, there also it will be treated as drawings or it will be treated as an expense ,since a limited company is a separate legal entity separate from its owners
So even when we apply separate entity concept while doing accounting, in case of sole proprietor, if owner takes out salary from business, it will not be considered expense of the business , rather it will be a drawings which will be reduced from the Capital a/c.
Am i right sir
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