Asked by shawn christian on May 05, 2024
Verified
Which of the following would result if the owner withdrew cash from the business?
A) Cash would increase and Capital would decrease.
B) Cash would increase and Withdrawals would increase.
C) Cash would decrease and Withdrawals would increase.
D) An investment by the owner is not a business transaction.
Owner Withdrew
A transaction where the business owner takes out funds from the business for personal use, often recorded as a reduction in owner's equity.
Cash
Physical money such as coins and banknotes, or a resource in bank accounts that is available for immediate withdrawal and use for payments.
Withdrawals
Money or other assets taken out of a business by its owner(s) for personal use.
- Acknowledge the impact of owner withdrawals and investments on Owner's Equity.
Verified Answer
VT
Victor TrevinoMay 11, 2024
Final Answer :
C
Explanation :
When the owner withdraws cash from the business, the business's cash account decreases because money is being taken out. At the same time, the withdrawals account, which tracks the amount of money taken out of the business by the owner for personal use, increases. This reflects the decrease in business resources and the increase in owner's withdrawals.
Learning Objectives
- Acknowledge the impact of owner withdrawals and investments on Owner's Equity.