Question:
If the owner of a company withdraws cash from the business for personal use, how does this affect the accounting equation? State whether the assets, liabilities, and owner's equity increase, decrease, or stay the same.
See Also
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The accounting equation is the equation on which the double-entry system is based, and each transaction has at least two effects on this equation. Since there are double entry, one for the debit and one for the credit side, the equation will still balance after each transaction has been processed.
Answer and Explanation:1
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Let us analyze the effect on each component like this:
| Effect | Explanation | |
|---|---|---|
| Assets | Decrease | Since the owners withdraws cash from the business for... |
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