If the amount of net income for the current period is less than the amount of the owner's withdrawals, there will be a(n)
A) decrease in the Cash account.
B) increase in the owner's Capital account.
C) decrease in the owner's Capital account.
D) increase in the Cash account.
E) increase in liabilities on the balance sheet.

Question

Quizplus · Accepted Answer

If the amount of net income for the current period is less than the amount of the owner's withdrawals, then it means that the owner has taken out more from the business than what they've earned. This results in a decrease in the owner's equity, which is reflected in the Capital account. Therefore, option C is correct - there will be a decrease in the owner's Capital account.

If the Amount of Net Income for the Current Period