In a double entry for withdrawing inventory from a current account, which account is credited?

When withdrawing inventory from a current account, the correct approach in double-entry bookkeeping involves understanding the nature of accounts being affected. In this case, when inventory is drawn, it typically represents a reduction in the value of the business's inventory, which indicates that stock is being taken out for personal use or another purpose.

Crediting the Purchases account reflects that the business will not incur a cost for the inventory taken out, as the inventory which was previously counted as an asset is now removed. However, in this scenario, it is important to distinguish that the Drawings account is actually the account that should be credited, symbolizing that the owner or partner is withdrawing assets from the business for personal use and not for purchasing goods for resale or business purposes.

The Drawings account is a type of capital account that reflects movements where personal withdrawals decrease the owner's equity in the business. Thus, when inventory is withdrawn, it is recorded as a debit to the Drawings account to reflect that the business assets are being utilized personally.

In summary, withdrawing inventory affects the Drawings account, indicating a decrease in the business's equity as the owner removes stock for personal purposes. This distinction is crucial in understanding double-entry bookkeeping as it illustrates the relationship between business assets, equity,