If Owner's Equity Increases from the Beginning of the Year

question 76

Multiple Choice

If owner's equity increases from the beginning of the year to the end of the year then

• A) net income is less than owner drawings.
• B) a net loss is less than owner drawings.
• C) additional owner investments are less than net losses.
• D) net income plus investments is greater than owner drawings.

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Definitions:

APC

The Average Propensity to Consume indicates the share of income used for consumption purposes.

Disposable Income

Economic reserves left for households after income tax deductions, meant for spending and saving.

Consumption

The process by which goods and services are used by households, contributing to the overall demand in an economy.

Induced Consumption

Induced consumption is the portion of consumer spending that varies with income levels, suggesting that as people earn more, they tend to spend more.