8. Inventory Drawings Flashcards
1
Q
What is the accounting treatment for inventory drawings?
A
If an owner takes items of inventory from the business as drawings, we do not need to adjust opening or closing inventory.
Cost of sales is reduced with the cost of items withdrawn.
The journal entry debits the drawings account and credits cost of sales.
When a question says that inventory has been used or removed from the business by the owner, it is important to ensure that it is accounted for as a drawing.
