BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following accounts should be listed under the Owner’s Equity of a Sole Proprietorship company?
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Common Stocks-₱20, 000
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Retained Earnings-₱5, 000
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Mr. Perez, Capital-₱10, 000
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Preferred Stocks-₱25, 000
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Explanation:
Detailed explanation-1: -In a sole proprietorship, the owner’s equity is equal to the assets of the business minus any liabilities.
Detailed explanation-2: -Owner’s equity includes: Money invested by the owner of the business. Plus profits of the business since its inception. Minus money taken out of the business by the owner.
Detailed explanation-3: -Owner’s equity examples Example 1: If you own a car worth $20, 000 but you owe $5, 000 against it, your owner’s equity is $15, 000. Example 2: If you buy a house for $500, 000 and pay $100, 000 toward the loan, and have belongings worth $65, 000, your liabilities are around $400, 000. Your owner’s equity is $165, 000.
There is 1 question to complete.