How Is the Accounting Equation Affected When a Partner Withdraws

question 60

Multiple Choice

How is the accounting equation affected when a partner withdraws cash?

• A) Both equity and assets decrease; liabilities are not affected.
• B) Assets increase and equity decreases; liabilities are not affected.
• C) Both assets and liabilities decrease; equity is not affected.
• D) Liabilities decrease and assets increase; equity is not affected.

Calculate net cash provided or used by operating, investing, and financing activities.

Understand the treatment and reporting of non-cash investing and financing activities.

Demonstrate the ability to prepare a statement of cash flows from provided data.

Evaluate the effect of cash flows on a company's liquidity, financial flexibility, and operating capacity.

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Definitions:

Free Trade

The absence of tariffs, quotas, or other governmental restrictions on international trade, allowing goods and services to move freely across borders.

Opportunity Cost

Signifies the advantages that a person, investor, or company forgoes by selecting one option instead of another.

Tables

Arrangements of data in rows and columns that systematically display information.

Comparative Advantage

The ability of an individual, firm, or country to produce a certain good at a lower opportunity cost than its trading partners.