Answer to Question #298580 in Management for lyly

Question

Case 2: The owner of the business is questioning why the gasoline and oil consumed by the

family in going to Cagayan by his family which was paid from cash of the business charged to his

personal drawing. He is claiming that since he is the owner of the business, he has the discretion

to the use of business cash. How would you explain your accounting for such payment?​

Answer 1

Owners can take money from the business as withdrawals from the profits. The most important thing to to do is to ensure they do not take money needed by employees for example salaries or pay other bills of the business. Another important point about taking money from His business: You don't take money from "profits" because they aren't in the bank. You take money from the business bank account. One should add your personal needs to the business budget and make sure you have enough each month to meet your business obligations first.