If an owner decides to withdraw money from the company, which of the following would be the result?
A)A debit to the owner's equity account
B)A credit to the cash account
C)A credit to the owner's equity account
D)Both A and B
E)None of the above

Question

Quizplus · Accepted Answer

If an owner decides to withdraw money from the company, the result is a debit to the owner's equity account and a credit to the cash account. A debit will decrease the owner's equity account and the credit will decrease the cash account.
Key Takeaway: The double-entry method of accounting requires debits and credits to be equal. Each transaction will have a debit and a credit of the same amount. For these types of questions, recall the accounting equation: Assets = Liabilities + Owner's Equity. Assets are on the left hand side of the equation (the same side as a debit entry, which increases the account), so a credit will decrease the account. Liabilities and owner's equity are on the right hand side of the equation (the same side as a credit entry, which will increase the account), so a debit decreases the account.

If an Owner Decides to Withdraw Money from the Company