When the owner of a company withdraws cash from the company, the journal entry shows a debit to cost of sales and a credit to cash.

Name: When the owner of a company withdraws cash from the company, the journal entry shows a debit to cost of sales and a credit to cash.
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Question

Quizplus · Accepted Answer

For financial reporting purposes, the withdrawal is reported not in the income statement, but rather in the statement of changes in owner's equity. The journal entry debits owner's equity and credits cash.

When the Owner of a Company Withdraws Cash from the Company