Final answer:
Family withdrawals in a small business are typically included in the owner's equity section of the financial statements, not considered business expenses.
Step-by-step explanation:
In a small business, family withdraws are typically included in the owner's equity section of the financial statements. This is because family withdrawals represent the owner's personal expenses or withdrawals from the business for personal use. They are not considered business expenses and should not be recorded as such in the company's financial records.
For example, if the owner of a small business withdraws $500 from the business to pay their personal utility bill, this amount would be recorded as a decrease in the owner's equity account and not as a business expense.
Therefore, the statement 'a. true' is incorrect. Family withdrawals are not recorded as expenses in a small business, but rather as a decrease in the owner's equity.