Owners Draw VS Salary

1. Owners draw is known as Drawings and it is taken for personal use of the owners of the business according to Business Entity Concept Gaap while salary is the remuneration, benefits or reward received against the services delivered to the company or corporation by an employee.

2. Drawings is Contra Equity Account which is not concerned with the business as it is the internal matter of the proprietor while salary is an Expense for the corporation to pay to the employees for the current period if it is not paid but accrued for the next month, then it becomes Accrued Salaries or Salaries Payable that is a Current Liability.

 

Is An Owner's Draw Considered Income

No, as it is a Contra Equity Account which is considered as drawings deducted from closing balance of Capital.