Module 7 Homework the homework. 1. In each of the following situations, indicate

Question

Module 7 Homework the homework. 1. In each of the following situations, indicate whether the increase in net worth of the business is due to an owner investment, a revenue or a gain. a. The Workout Wear retail store sells athletic clothing. The owner, Paul Stretch, sold a sweatsuit to a customer on account. b. Marybeth Sourly operates a lemonade stand at the local high school football games. She bought a 50-pound bag of sugar for the business and paid for it out of her personal checking account. c. Samantha Courtland, a real estate attorney, performed legal services for a client, and the client signed a promissory note for the amount of the fee. d. The Milky Way dairy farm sold a delivery truck for an amount exceeding the book value of the truck

Explanation / Answer

A-

revenue

Increase in net worth due to sale of sweatsuit which is the regular business of the owner so profit margin on sale of sweatsuit will increase the net worth

B-

Owner investment

As payment to vendor of sugar bags is made from owner personal account so it increases the net worth of business due to owner investment

C-

revenue

Increase in net worth due to services performed by the owner and it is due to service revenue

D-

Gain

Increase in Net worth of business is due to gain on sale of delivery truck of business

A-

revenue

Increase in net worth due to sale of sweatsuit which is the regular business of the owner so profit margin on sale of sweatsuit will increase the net worth

B-

Owner investment

As payment to vendor of sugar bags is made from owner personal account so it increases the net worth of business due to owner investment

C-

revenue

Increase in net worth due to services performed by the owner and it is due to service revenue

D-

Gain

Increase in Net worth of business is due to gain on sale of delivery truck of business

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