What entry reflects a withdrawal of capital by the proprietor?

When a proprietor withdraws capital from the business, it is important to understand how this transaction affects the accounting equation and the financial statements. In accounting, a withdrawal of capital by the proprietor reduces the owner's equity in the business. This change is recorded through a debit to the proprietorship account.

By debiting the proprietorship account, the ledger reflects a decrease in the ownership equity. This is a crucial concept, as it exemplifies how personal withdrawals affect the financial health of a business. The debit entry signifies that the value of the owner's equity has diminished because personal assets are being taken out of the business.

This action does not require an immediate impact on assets in a separate account, hence why assets are not credited or debited directly in this case. While capital withdrawals don’t affect income directly, they are important transactions that must be accurately recorded to maintain proper accounting practices.