What Is Effect of Decreases An Asset And Decreases Equity On Accounting Equation





Decreases An Asset And Decreases EquityWhen the owner of the business withdrew Cash Rs. 5000 for his own personal use, then this Transaction has two fold effects on Accounting Equation, but first, we need to learn what is the Journal Entry:










                                        Drawings Account  5000


                                                                       Cash Account  5000


(Cash Withdrawn For Personal Use From business)






  Assets  =   Liabilities + Owner’s Equity



                            (5000)   =                                                          (5000)




(i) There is decrease in Cash Account, so it is deducted from Assets Side

(ii) There is a Drawings Account which affects Owner’s Equity Side, so it is decreased by Rs. 5000




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