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When the owner withdraws cash from the business for personal use, per the Business Entity Concept:
AIt is NOT treated as a business expense; it is drawings
BIt is treated as business expense reducing profit
CIt is treated as a loan owed to the owner
DIt is treated as fresh capital injection
Answer & Solution
Correct answer: A. It is NOT treated as a business expense; it is drawings
1. Per OCR: "when the owner takes away from the business cash/goods for his/her personal use, it is not treated as business expense."
2. Drawings reduce owner's capital, not P&L.
3. Owner and business are separate.
_Source: ICMAI BoS CMA Foundation Paper 2 (FFCA) — Paper2_07042026.pdf, Module 1 §1.2.2.1 (page 16)_