Question
Cash withdrawn by the proprietor from the business for
his personal use’ causesSolution
When the proprietor withdraws cash from the business for personal use, it results in a decrease in the cash asset since cash is being taken out of the business. At the same time, it also causes a decrease in the owner's capital because the owner's capital represents the owner's investment in the business. When the owner withdraws cash for personal use, it reduces their ownership interest in the business, leading to a decrease in owner's capital.
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