Question

Withdraw for private use accounting equation

Answer 1

Answer:

Capital will be reduced

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Answer 2

Answer:

In Accounting Equation,reduction in assets accounts and deduction from the owner's equity.

Explanation:

When goods withdrawn for personal use, it is recorded in the drawing account, the journal entry is as:

Drawings A/c................Dr     XXXX

     To Inventory A/c.........Cr     XXXX

The withdrawl would impact the Accounting Equation as:

Assets = Liabilities + Owner's Equity

Inventory   = None + Drawings

So, the inventory is reduced from the assets account by the credit entry as goods are withdrawn whereas the amount of drawings will be dedcted as there reduction in equity.