A drawing by an owner has the effect of:
A) increasing assets and decreasing owners' equity.
B) decreasing assets and owners' equity.
C) decreasing assets and increasing owners' equity.
D) leaving the entire balance sheet unchanged.

Question

Quizplus · Accepted Answer

Drawings by an owner decrease the assets of the business (as cash or other assets are taken out) and also decrease the owner's equity because the owner is essentially taking out part of their investment in the business.

A Drawing by an Owner Has the Effect Of