BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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assets plus liabilities.
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net income.
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owner’s capital at the beginning of the period plus net income minus drawings.
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owner’s capital at the beginning of the period plus net income minus liabilities.
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Detailed explanation-1: -The answer is option a. “Owner’s capital at the beginning of the period plus net income minus drawings.” When the company is a single proprietorship, the owner’s contributions, whether cash or non-cash, are recorded to the Owner’s capital, which is an equity account having a normal credit balance.
Detailed explanation-2: -The ending owner’s capital account equals the beginning balance minus any withdrawals, plus contributions, plus or minus any net income or loss for the period. This formula is recalculated at the end of each year to find the balance at the end of the accounting period.
Detailed explanation-3: -Owners Capital Formula = Total Assets – Total Liabilities Total assets also equals to the sum of total liabilities and total shareholder funds.
Detailed explanation-4: -It is calculated by deducting all liabilities from the total value of an asset (Equity = Assets – Liabilities).
Detailed explanation-5: -The formula for owner’s equity is: Owner’s Equity = Assets – Liabilities.