If Taylor Willow, the owner of Willow Hardware Inc., uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:
A) Debit Automobiles and credit Cash
B) Debit Cash and credit Salary Expense.
C) Debit Cash and credit Dividends.
D) Debit Dividends and credit Cash.
E) Debit Automobiles and credit Cash.

Question

Quizplus · Accepted Answer

The purchase of a family automobile with business cash is considered a withdrawal of assets by the owner for personal use, which should be recorded as a dividend or drawing.

If Taylor Willow, the Owner of Willow Hardware Inc