Which account is classified as Owner's Equity?

• A. Wages Expense
• B. Cash
• C. P. Coyote, Capital
• D. P. Coyote, Drawing

Answer: (D)

Owner's Equity reflects what the owner actually has left in the business after liabilities, and it changes with injections of capital, earnings, and withdrawals. The Drawing account specifically records money the owner takes out of the business for personal use. Those withdrawals reduce the owner’s stake in the business, so this type of account is considered part of Owner's Equity (often shown as a deduction from the Capital balance on the balance sheet, i.e., a contra-equity effect). It isn’t an expense, and it isn’t an asset, which is why it fits here while the other options do not. Wages Expense is an expense, Cash is an asset, and while Capital is an equity account, the Drawing account is the one that explicitly reduces equity.