To close the Withdrawals account,
A) debit Withdrawals; credit Capital.
B) debit Capital; credit Withdrawals.
C) debit Withdrawals; credit Income Summary.
D) debit Income Summary; credit Withdrawals.

Question

Quizplus · Accepted Answer

Closing the Withdrawals account involves transferring the balance of the account to the Capital account. Since withdrawals are a reduction of the owner's equity, the Withdrawals account needs to be debited. On the other hand, the Capital account needs to be credited since it is an increase in the owner's equity. Therefore, option B is the correct choice.

To Close the Withdrawals Account