Withdrawing cash from a business entity will result in an increase in owner's equity.

Question

Quizplus · Accepted Answer

Withdrawing cash from a business entity will actually result in a decrease in owner's equity. This is because cash is considered an asset, and withdrawing cash reduces the total assets of the business. Since owner's equity is calculated as assets minus liabilities, a decrease in assets will also result in a decrease in owner's equity.

Withdrawing Cash from a Business Entity Will Result in an Increase