What is the result if the amount of net income for the year is less than the amount of the withdrawals?
A) The Capital account increases.
B) The amount in the Cash account decreases.
C) The amount in the Cash account increases.
D) The Capital account decreases.

Question

Quizplus · Accepted Answer

If the amount of net income for the year is less than the amount of the withdrawals, it means that the business has spent more money than it has earned. This will result in a decrease in the Capital account, as the withdrawals will have to be subtracted from the beginning balance.

What Is the Result If the Amount of Net Income