Capital of a business decreases if there is an increase in___________?
Correct answer: A. Drawings
- A. Drawings
- B. Income
- C. Gains
- D. Fresh capital
Explanation
Drawings are withdrawals by the owner and reduce the owner's equity. Income and gains increase capital, while fresh capital directly increases it.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
Practise Accounting Principles
351 free Accounting Principles MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Accounting questions like this
Accounting is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Accounting Principles questions
If the business's owner withdraws cash for his/her personal use what will be the effect on capital?
Net income equal to Revenues minus____________?
Collection of account receivable will
Find out the value of assets if: Liabilities=$5000 and Capital=$1000
The Basic accounting equation is___________?
Which of the following is the closing balance of a ledger account?