The owner withdraws cash from the business for personal use. Then,

A:

Assets: Decrease, Liabilities: Decrease, Equity: DecreaseB:
Assets: Decrease, Liabilities: No Effect, Equity: DecreaseC:Assets: No Effect .Liabilities: Increase, Equity: No EffectD:
None of these
Correct answer is option 'B'. Can you explain this answer?

Question

The owner withdraws cash from the business for personal use. Then,

A:

Assets: Decrease, Liabilities: Decrease, Equity: DecreaseB:

Assets: Decrease, Liabilities: No Effect, Equity: DecreaseC:Assets: No Effect .Liabilities: Increase, Equity: No EffectD:

None of these

Correct answer is option 'B'. Can you explain this answer?

Answer

Here, asset are decrease because the owner withdraw asset from the business for his personal use and it don't give any benefit to our business. Liabilities remain same because it does not give any effect to the liabilities of the business . And our capital is decreased because the drawings are deducted from our capital because it give effect to our capital.

Answer

Assets are withdraw from the business that's why assets are decreased and liabilities have no any effect and personal use are called drawing and drawing are always deducted from capital that's why equity are also decreases.

Answer

Until and unless it is not given that capital is commenced till then you need to take liabilities as zero for the business.

Answer

I dont know

Answer

Question:
The owner withdraws cash from the business for personal use. Then,
A:
Assets: Decrease, Liabilities: Decrease, Equity: Decrease
B:
Assets: Decrease, Liabilities: No Effect, Equity: Decrease
C:
Assets: No Effect, Liabilities: Increase, Equity: No Effect
D:
None of these

Answer:
The correct answer is option B: Assets: Decrease, Liabilities: No Effect, Equity: Decrease. Let's break down the effects of the owner's cash withdrawal on each component of the accounting equation.

Assets:
Assets are resources owned by the business. When the owner withdraws cash from the business for personal use, the amount of cash available in the business decreases. Cash is classified as an asset on the balance sheet. Therefore, the withdrawal of cash will result in a decrease in assets.

Liabilities:
Liabilities are the financial obligations of the business. The owner's withdrawal of cash for personal use does not directly impact the liabilities of the business. Liabilities typically include items such as loans, accounts payable, and accrued expenses. Since the owner's withdrawal does not involve any changes to the liabilities, they remain unaffected.

Equity:
Equity represents the owner's interest in the business. It is calculated as the difference between the assets and liabilities of the business. When the owner withdraws cash for personal use, it reduces the owner's equity in the business. This is because the owner is essentially taking money out of their own investment in the business. As a result, the equity decreases.

Therefore, the correct answer is option B: Assets: Decrease, Liabilities: No Effect, Equity: Decrease. The withdrawal of cash by the owner reduces the assets of the business but does not impact the liabilities. However, it does decrease the owner's equity in the business as they are taking cash out of their investment.

Answer

Here the answer will be Asset(+) 'Named Drawings' and Asset(-) 'named the asset withdrawn by the owner'

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