Are drawings included in the profit and loss account?
I own a business and I am trying to post a journal for a transaction. Do you know where drawings are recorded and if they are recorded in the profit and loss account?
Drawings is not an income statement account. When a business owner takes money from the capital that he/she has contributed, its the capital contributed that is reduced and has nothing to do with the actual activities of the company.
The profit and loss account is basically the whole income statement that is aggregated into an account which is then transferred to the reserves (the profit and loss account is the only way that the income statement and the balance sheet can interact). The drawings reduce the initial capital contributed to the company and they are not included in the profit and loss account.