DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Drawings - Showing as a negative amount in equity


#1

Just having trouble.

I have the following steps in place to maintain personal drawings.
Step 1: Any personal transaction are transfered to a dummy bank account Called Personal
Step 2: any owners contribution is done as a tranfer.
Step 3: At the end of the financial year we go into the bank account “Personal” and spend money as drawings. (Equity - Drawings"

But any entries into this account come up as a negative. so my equity is - 58000

How do i fix this.


#2

Don’t use bank accounts to track drawings.

There is a module for that, see: http://guides.manager.io/businesses/capital-accounts


#3

To be more accurate.

I am having issues getting the funds out of bank account and show in equity.

I go into the bank account
I click spend money
I select owners equity
And click create.

But it shows in equity as a negative amount. (-12000 owners equity)


#4

Well, that makes sense. If you take money out of business, then value of the business (equity) decreases.

Normally business will make a profit which is posted to Retained earnings under equity and the money taken out of business will offset the profit business is making.

See: http://www.accountingcoach.com/blog/negative-owners-equity