When the Withdrawals account is closed,
A) Owner's Capital will be debited.
B) Income Summary will be debited.
C) Income Summary will be credited.
D) None of these are correct.

Question

Quizplus · Accepted Answer

When the Withdrawals account is closed, it means that the owner has stopped taking money out of the business for personal use. Since withdrawals are considered to be a reduction of owner's equity, the closing entry to eliminate the balance in the Withdrawals account requires a debit to Owner's Capital.

When the Withdrawals Account Is Closed