Match each transaction with its effect on the accounting equation. Each letter may be used more than once.
-Cash withdrawal by owner
A)Increase assets, increase liabilities
B)Increase liabilities, decrease owner's equity
C)Increase assets, increase owner's equity
D)No effect
E)Decrease assets, decrease liabilities
F)Decrease assets, decrease owner's equity

Question

Quizplus · Accepted Answer

When the owner takes out cash from the business, it reduces the amount of cash on hand (an asset), which decreases owner's equity (the owner's interest in the business). Therefore, the transaction would decrease assets and decrease owner's equity, as represented by choice F.

Match Each Transaction with Its Effect on the Accounting Equation