Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 24 - No. 13)
What is the effect of owner's drawings on a sole trader's financial position?
Increases assets and increases equity.
Decreases assets and increases equity.
Decreases assets and decreases equity.
Increases assets and decreases liabilities.
Explanation
Drawings, which are personal withdrawals by the owner, decrease both assets (usually cash) and owner's equity.
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