Difference Between Drawings And Dividends

Drawings is the amount of cash or goods taken away by the sole owner / proprietor from the business for his own personal use while Dividends is the portion of Net income distributed among the shareholders.

The term “Drawings” is used in Sole Proprietorship or Partnership while “Dividends” is used in case of company or corporation but both have used for the same purposes i.e., these are used by the sole owners, partners or owners for their personal use.

Drawings are related to personal activities of the business's owners separate from their business as it is withdrawn from Capital invested by the sole owners in the business while dividends is the portion of Profits and it is deducted from equity as a contra equity account so it is concerned with the business affairs.