The effect on the statement of financial position when the owner withdraws money from the business is:
A)decrease asset bank; decrease equity.
B)decrease drawings; decrease equity.
C)increase drawings; increase equity.
D)decrease asset bank; increase equity.

Question

Quizplus · Accepted Answer

When the owner withdraws money from the business, it results in a decrease in the business's bank assets (or cash) and a decrease in the owner's equity. This is because the withdrawal represents assets leaving the business and reduces the owner's claim on the remaining assets.

The Effect on the Statement of Financial Position When the Owner