Which of the following will not cause a change in the equity of a business?
A) Payment of an interest free business debt.
B) Withdrawal of cash by the owner.
C) Sale of land at a profit.
D) Losses from unprofitable operations.

Question

Quizplus · Accepted Answer

Payment of an interest-free business debt will not affect the equity of a business as it represents a liability that is paid off. Equity represents the residual interest in the assets of a business after the liabilities are paid off. Withdrawal of cash by the owner will reduce the equity of the business, sale of land at a profit will increase the equity of the business, and losses from unprofitable operations will decrease the equity of the business.

Which of the Following Will Not Cause a Change in the Equity