What is the result if the amount of net income for the year is less than the amount of the owner's withdrawals?

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Business

Baby Boo

8 July, 06:40

What is the result if the amount of net income for the year is less than the amount of the owner's withdrawals?

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Samson Rhodes · Answer 1

The answer is the capital account decreases. If the net income of the year is greater it means that there is revenue which will make the capital account increase but in this case if the withdrawals are higher it means that the money decreases since it is an outflow for the part of the owner.