Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 3 - The Accounting Information System - Questions - Page 132: 2d

Answer

This is a business transaction.

Work Step by Step

This is a business transaction because when the owner makes a withdrawal, the cash account is credited while the owner's withdrawal account is debited. Thus, at the end of the accounting period, the owner's withdrawal account is closed to the capital account, which reflects a reduction in equity in the company.
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