Why, when I make a withdrawal from Proprietor Drawings, does it show the transaction as a deposit to the account and add the amount to the balance?
And by the way, how do I reverse this incorrect transaction that was added?
What do you mean by a “withdrawal from Proprietor Drawings”, and where exactly are you seeing the “deposit to the account”?
When you tag a withdrawal from your current account as drawings it is treated as a transfer from the current account to the drawings account, and it is correct for the drawings bank account balance to increase by the amount you have drawn. The balance on your drawings account would only go down if you used personal funds to pay for a business expense or directly injected personal funds into the business account.
At the year end you would typically clear off the balance on your drawings “bank account” by manually creating a money out transaction and tagging it as “something not on the list” to the drawings nominal in the 3xxx capital and reserves section.
The other possible point of confusion is if you’re looking at the chart of accounts - on this view nominal balances that are net “credit” show in green and net “debit” show in red, but for bank account nominals a “positive balance” is a debit and an overdrawn balance is a credit. This is reversed from how you might normally think of it on the statement you get from your bank but it is correct - the bank statement is from the bank’s perspective and while money you have deposited with the bank is an asset from your point of view, it’s a liability from theirs.
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