P. Coyote, Drawing is classified as which?

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Study for the Accounting CBE Exam. Gain insights with flashcards and multiple-choice questions, each paired with detailed explanations. Prepare for your accounting certification!

Multiple Choice

P. Coyote, Drawing is classified as which?

Explanation:
Drawing represents the owner's withdrawals from the business and is classified as part of the owner's equity, not an asset or an expense. It reduces the owner’s stake in the company, so the drawing account appears under equity (often described as a drawing or withdrawals contra-account to the Owner’s Capital). That’s why the correct choice is the drawing account itself. The other options depict assets (Cash), revenue (Fees Earned), and expenses (Wages Expense), which do not reflect a reduction of the owner’s equity. In a cash withdrawal, you'd typically debit Drawing and credit Cash, showing the decrease in both cash and owner’s equity.

Drawing represents the owner's withdrawals from the business and is classified as part of the owner's equity, not an asset or an expense. It reduces the owner’s stake in the company, so the drawing account appears under equity (often described as a drawing or withdrawals contra-account to the Owner’s Capital). That’s why the correct choice is the drawing account itself. The other options depict assets (Cash), revenue (Fees Earned), and expenses (Wages Expense), which do not reflect a reduction of the owner’s equity. In a cash withdrawal, you'd typically debit Drawing and credit Cash, showing the decrease in both cash and owner’s equity.

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