Cash is used to pay for a car for personal use by the owner.The transaction includes
A) debiting Cash and crediting Drawing.
B) debiting Drawing and crediting Cash.
C) debiting Capital and crediting Cash.
D) debiting Car Expense and crediting Cash.

Question

Quizplus · Accepted Answer

When the owner pays for the car with personal funds, it is considered a withdrawal or "drawing" from the business. Therefore, we would debit the Drawing account (not Capital as it is not an investment into the business) and credit the Cash account to reflect the cash being taken out of the business.

Cash Is Used to Pay for a Car for Personal