If the amount of net income for the current period exceeds the amount of the owner's withdrawals, there will be a(n):
A)decrease in the cash account.
B)increase in the owner's capital account.
C)decrease in the owner's capital account.
D)increase in the cash account.

Question

Quizplus · Accepted Answer

An increase in net income that exceeds the owner's withdrawals results in an increase in the owner's capital account, as net income increases the equity of the business, and withdrawals decrease it. If net income exceeds withdrawals, the net effect is an increase in owner's equity.

If the Amount of Net Income for the Current Period