1. If beginning capital was $70,000, ending capital is $48,000, and the owner\'s
ID: 2434730 • Letter: 1
Question
1. If beginning capital was $70,000, ending capital is $48,000, and the owner's withdrawals were $21,000, the amount of net income or net loss was (Points: 3)net income of $42,000
net income of $17,000
net loss of $22,000
net loss of $1,000
2. If total assets decreased by $88,000 during a period of time and owner's equity increased by $65,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is (Points: 3)
$23,000 increase
$88,000 decrease
$153,000 increase
$153,000 decrease
3. A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to (Points: 3)
increase one asset, decrease another asset
decrease an asset, decrease a liability
increase an asset, increase a liability
increase an asset, increase owner's equity
4. The business entity concept means that (Points: 3)
the owner is part of the business entity
an entity is organized according to state or federal statutes
an entity is organized according to the rules set by the FASB
the entity is an individual economic unit for which data are recorded, analyzed, and reported
5. The assets and liabilities of the company are $175,000 and $40,000, respectively. Owner's equity should equal (Points: 3)
$215,000
$135,000
$175,000
$40,000
Explanation / Answer
1. If beginning capital was $70,000, ending capital is $48,000, and the owner's withdrawals were $21,000, the amount of net income or net loss was (Points: 3) net loss of $1,000 2. If total assets decreased by $88,000 during a period of time and owner's equity increased by $65,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is (Points: 3) $153,000 increase 3. A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to (Points: 3) decrease an asset, decrease a liability 4. The business entity concept means that (Points: 3) the entity is an individual economic unit for which data are recorded, analyzed, and reported 5. The assets and liabilities of the company are $175,000 and $40,000, respectively. Owner's equity should equal (Points: 3) $135,000
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