Asked by diksha pathria on Jun 06, 2024
Verified
Ryan withdrew cash from the business to pay his personal cell phone bill. The expanded accounting equation changes include:
A) increase in both Cash and Withdrawals.
B) decrease in both Cash and Withdrawals.
C) decrease in Cash and increase in Withdrawals.
D) increase in Cash and decrease in Withdrawals.
Withdrawals
Money or assets taken from a business by its owner(s) for personal use, typically reducing the total equity.
Cash
Liquid currency and assets readily convertible to currency, used by businesses to conduct transactions.
- Understand the interplay between taking out funds, putting in capital, and the ownership interest.
- Review the impact of multiple transactions on Assets, Liabilities, and Owner's Equity.
Verified Answer
JB
Jovan Berry
Jun 11, 2024
Final Answer :
C
Explanation :
When Ryan withdraws cash from the business to pay his personal cell phone bill, it results in a decrease in Cash (an asset) and an increase in Withdrawals (owner's equity decreases), reflecting the use of business resources for personal expenses.
Learning Objectives
- Understand the interplay between taking out funds, putting in capital, and the ownership interest.
- Review the impact of multiple transactions on Assets, Liabilities, and Owner's Equity.