Concept explainers
(a)
Owner withdrawals:
Owner withdrawals refer to the withdrawals of money by the owner from the business for his/her personal use. This decreases the owner’s equity account. As owner’s drawing account is increased by debits, and decreased by credits, it has a normal debit balance.
To discuss: The cause of the unusual balance of the cash account with a credit balance of $1,850, assuming that no errors have occurred during journalizing, and posting.
(b)
To identify: Whether the credit balance of $1,850 in the cash account is an asset, a liability, owner’s equity, revenue, or an expense.
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