The withdrawal of cash by the owner will
A)decrease net income.
B)increase liabilities.
C)not affect total assets.
D)decrease owner's equity.

Question

Quizplus · Accepted Answer

When the owner withdraws cash from the business, it decreases the amount of assets available in the business. This, in turn, reduces the amount of owner's equity in the business, as the owner's equity is reduced by the amount of the withdrawal. Therefore, the correct answer is D, which states that the withdrawal of cash by the owner will decrease owner's equity. The other options are incorrect: A is incorrect because the withdrawal does not affect net income; B is incorrect because the withdrawal does not increase liabilities; and C is incorrect because the withdrawal decreases total assets.

The Withdrawal of Cash by the Owner Will