71
Which of the following will decrease Owner’s Equity?
A.
B.
C.
D.
Answer & Solution
Drawings (withdrawals by the owner) reduce Owner’s Equity as they decrease available funds.
72
The basic formula for calculating Ending Owner’s Equity is:
A.
B.
C.
D.
Answer & Solution
Ending Owner’s Equity is determined by adding net income and additional investments to beginning capital, then subtracting drawings.
73
If opening capital is $50,000, net income is $20,000, drawings are $10,000, and additional capital introduced is $5,000, what is the closing capital?
A.
B.
C.
D.
Answer & Solution
Closing Capital = Opening
Capital + Net Income + Additional Capital – Drawings
= $50,000 + $20,000 + $5,000 – $10,000 = $65,000
74
If a business incurs a net loss, how does it affect Owner’s Equity?
A.
B.
C.
D.
Answer & Solution
A net loss reduces Owner’s Equity, as it decreases the overall wealth of the business.
75
The financial statement prepared before the Statement of Changes in Owner’s Equity is:
A.
B.
C.
D.
Answer & Solution
The Income Statement is prepared first to determine net income or loss, which is then used in the Statement of Changes in Owner’s Equity.
76
The final amount in the Statement of Changes in Owner’s Equity is reported in which financial statement?
A.
B.
C.
D.
Answer & Solution
The closing Owner’s Equity from the Statement of Changes in Owner’s Equity is reported under the Equity section in the Balance Sheet.
77
The Cash Flow Statement reports:
A.
B.
C.
D.
Answer & Solution
The Cash Flow Statement summarizes cash inflows (receipts) and outflows (payments) from operating, investing, and financing activities.
78
Cash received from the sale of goods and services is classified under:
A.
B.
C.
D.
Answer & Solution
Cash receipts from sales of goods and services are part of Operating Activities, as they relate to the core business operations.
79
Which of the following is classified as an investing activity in the Cash Flow Statement?
A.
B.
C.
D.
Answer & Solution
Investing Activities include cash transactions for acquiring and selling long-term assets such as property, plant, and equipment.
80
Which of the following is included in cash outflows from operating activities?
A.
B.
C.
D.
Answer & Solution
Operating Activities include day-to-day business expenses such as wages, salaries, and payments to suppliers.
