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WAEC Financial Accounting 2005 Question 32

Question 32

Accounting Equation

Which of the following statements is not correct?

  1. A.Profits increase capital
  2. B.Losses reduce capital
  3. C.Drawings reduce capital
  4. D.Drawings increase capital.
Show the answer and explanation

Answer: D (Drawings increase capital.)

Explanation

Drawings reduce capital.