Which of the following transactions would cause an asset to decrease and the owner's equity to decrease?
A) The business provided services to a cash customer.
B) The business bought supplies for cash.
C) The owner withdrew cash from the business.
D) The business bought supplies on account.

Question

Quizplus · Accepted Answer

When the owner withdraws cash from the business, the asset (cash) decreases and the owner's equity decreases as well because the owner is taking money out of the business for personal use. Option A would lead to an increase in both assets and owner's equity, option B would lead to a decrease in assets and an increase in expenses, and option D would lead to an increase in assets and an increase in accounts payable (liability).

Which of the Following Transactions Would Cause an Asset to Decrease