If Taylor Willow, the Owner of Willow Hardware Inc

question 109

Multiple Choice

If Taylor Willow, the owner of Willow Hardware Inc., uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

• A)Debit Automobiles and credit Cash.
• B)Debit Cash and credit Salary Expense.
• C)Debit Cash and credit Dividends.
• D)Debit Dividends and credit Cash.
• E)Debit Cash and credit Automobiles.

---

Definitions:

Budget Deficits

A financial situation where a government's expenditures surpass its revenues.

Budget Surpluses

A situation where a government's revenue exceeds its expenditures over a specific period, indicating financial health.

Annually Balanced Budget

A budget in which revenues and expenditures are equal within a single fiscal year, ensuring no deficit or surplus.

Contractionary Gap

A situation where the aggregate output in an economy is below its potential output, leading to unemployment and underutilized resources.