If an owner makes a withdrawal of cash, then

Question

Quizplus · Accepted Answer

When an owner makes a withdrawal of cash from the business, it means that they are taking money out of the business for personal use. This decreases the amount of cash in the business and, as a result, decreases the owner's equity in the business. Therefore, option C is correct. Option A is not necessarily true, as withdrawals are a normal part of the accounting process. Option B is incorrect because owner's equity decreases with a withdrawal of cash, not increases. Option D is also incorrect as there is no new liability created when an owner takes cash out of the business.

If an Owner Makes a Withdrawal of Cash, Then