When owner withdraw cash for its private use, it is called ___________?
Correct answer: D. Drawing
- A. Profit
- B. Income
- C. Expense
- D. Drawing
Explanation
Cash taken by the owner for personal use is recorded as drawings, which reduce the owner's capital. It is not an expense because it does not arise from operating the business.
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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.
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