Asked by Kylee Israelsen on May 28, 2024
Verified
Cash withdrawal by owner
A) Increase assets, increase liabilities
B) Increase liabilities, decrease owner's equity
C) Increase assets, increase owner's equity
D) No effect
E) Decrease assets, decrease liabilities
F) Decrease assets, decrease owner's equity
Accounting Equation
The foundational principle of accounting stating that Assets = Liabilities + Owner’s Equity, representing the structure of a balance sheet.
Cash Withdrawal
The act of taking money out of a bank account or cash reserve.
- Become familiar with how financial transactions alter the accounting equation.
Verified Answer
TN
Tr??ng Nguy?n QuangJun 02, 2024
Final Answer :
F
Explanation :
When the owner takes out cash from the business, it reduces the amount of cash on hand (an asset), which decreases owner's equity (the owner's interest in the business). Therefore, the transaction would decrease assets and decrease owner's equity, as represented by choice F.
Learning Objectives
- Become familiar with how financial transactions alter the accounting equation.