Question

An owner withdrawal of $20,000 would: A. decrease owner’s equity and increase assets by $20,000. B. increase owner’s equity and decrease liabilities by $20,000. C. increase liabilities and assets by $20,000.

Answer 1

C) increase liabilities and assets by $20,000.

Explanation :

Any financial transaction affects both assets and liability equally. If asset is increased , liability also is increased and vice-versa.

In the given problem , Option A and option B states that while one increases , other decreases. which is not possible .

So option C is correct.