Which accounts are affected when the owner withdraws cash from the business?
A) Assets decrease and Withdrawals increase.
B) Liabilities and Capital increase.
C) Assets and Liabilities increase.
D) None of the above are correct.

Question

Quizplus · Accepted Answer

When the owner withdraws cash from the business, the cash account, which is an asset, decreases, and the withdrawals account, which is a capital account, increases. This is because the owner is essentially taking money out of the business for personal use, which is considered a withdrawal of capital. Liabilities are not affected by the owner's withdrawal of cash.

Which Accounts Are Affected When the Owner Withdraws Cash from the Business