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What is the effect of a partner's withdrawal on the trial balance?
What is the effect of a partner's withdrawal on the trial balance?
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Practice Questions
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Q1
What is the effect of a partner's withdrawal on the trial balance?
Assets increase, Liabilities decrease
Assets decrease, Liabilities increase
Assets decrease, Capital decreases
Assets increase, Capital increases
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When a partner withdraws, the assets decrease (cash or other assets) and the capital account of the partner decreases.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the effect of a partner's withdrawal on the trial balance?
Solution:
When a partner withdraws, the assets decrease (cash or other assets) and the capital account of the partner decreases.
Steps: 4
Show Steps
Step 1: Understand that a partner's withdrawal means they are taking money or assets out of the business.
Step 2: Recognize that when a partner withdraws, the business's cash or other assets decrease.
Step 3: Identify that the partner's capital account, which shows their investment in the business, also decreases by the amount they withdrew.
Step 4: Know that the trial balance will reflect these changes: the total assets will go down, and the total capital will also go down.
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