Yes. You're right that it should come from equity. Actually, this article
<https://www.accountingtools.com/articles/are-dividends-considered-an-expense.html>
confirms it:
Dividends
<https://www.accountingtools.com/articles/what-are-dividends.html> are not
considered an expense <https://www.accountingtools.com/articles/expense>,
because they are a distribution of a firm’s accumulated earnings.
For this reason, dividends never appear on an issuing entity's income
statement <https://www.accountingtools.com/articles/the-income-statement>
as an expense. Instead,
dividends are treated as a distribution of the equity
<https://www.accountingtools.com/articles/equity> of a business.
When dividends are paid in cash, they are subtracted from the equity
section of the balance sheet
<https://www.accountingtools.com/articles/the-balance-sheet> and are
also subtracted from the cash line item in the balance sheet, resulting
in an overall decline in the size of the balance sheet.
Somehow this didn't sink in the first time I read it.
As to whether it's better to have a single Equity:Investments account or a
separate Equity:Drawings, I'll have to try both approaches to see which
works better.
Thanks for the help. It's very much appreciated.
Anders.
On Friday, 3 March 2023 at 12:39:27 am UTC+11 char...@gmail.com wrote:
> sorry,
>
> for the 2nd case the following is the right query
>
> select date, narration, cost(position) where account ~
> 'Equity:Inverstments-and-drawings' and number <0
>
>
> On Thursday, March 2, 2023 at 2:14:28 PM UTC+1 Chary Chary wrote:
>
>> I am not an accountant, but is my understanding, that everything which
>> comes to business from owner or gets withdraw goes through equity
>>
>> Something like this:
>>
>> 2000-01-01 open Equity:Initial-inverstments
>> 2000-01-01 open Equity:Drawings
>>
>>
>> 2000-02-01 * "Initial investment in business"
>> Equity:Initial-inverstments -10000.00 USD
>> Assets:Bank:Checking 10000.00 USD
>>
>> 2000-03-01 * "Withdrawing from business"
>> Equity:Drawings 5000.00 USD
>> Assets:Bank:Checking -5000.00 USD
>>
>>
>> Or may be even simpler,
>>
>> 2000-01-01 open Equity:Inverstments-and-drawings
>>
>> 2000-02-01 * "Initial investment in business"
>> Equity:Inverstments-and-drawings -10000.00 USD
>> Assets:Bank:Checking 10000.00 USD
>>
>> 2000-03-01 * "Withdrawing from business"
>> Equity:Inverstments-and-drawings 5000.00 USD
>> Assets:Bank:Checking -5000.00 USD
>>
>>
>> And then you can distinguish investments from drawings by their sign
>>
>> E.g.: for investments:
>>
>> select date, narration, cost(position) as value
>> where account ~ ''Equity:Inverstments-and-drawings' and value <=0
>>
>> something like this
>>
>> On Thursday, March 2, 2023 at 12:54:22 PM UTC+1
>> and...@anderslindstrom.com wrote:
>>
>>> I’ve only just started using beancount and I really like it.
>>>
>>> I have a question about how to model equity withdrawals. That is, if I
>>> run a business then, on occasion, I withdraw equity from the business. The
>>> terminology used here depends on the business type: “drawings”, (
>>> https://www.accountingcapital.com/basic-accounting/drawings/), “partner
>>> drawings” and “dividends” are used depending on the context.
>>>
>>> It seems that beancount doesn’t explicitly have this concept. It has
>>> account types Assets, Liabilities, Income, Expenses and Equity but not
>>> Drawings.
>>>
>>> I understand why this is so. It looks to me like beancount is targeted
>>> at personal finance where drawings aren’t really relevant.
>>>
>>> For my purposes, I have tried using Expense:Drawings as a workaround and
>>> it seems to do what I need for now. However, in accounting, drawings are
>>> considered to be their own top-level type (
>>>
>>> https://www.accountingtools.com/articles/are-dividends-considered-an-expense.html).
>>>
>>> I see that someone else has used Equity:Drawings instead (
>>> https://groups.google.com/g/beancount/c/ItnftyBIJzs/m/-q646QBjBQAJ).
>>>
>>> So my question is whether anyone else has had a need to deal with
>>> drawings and what pros and cons are associated with their approach.
>>>
>>> Anders.
>>>
>>>
>>>
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