If the Adjusting Entry to Transfer Net Income/Owner's Equity into the Owner's

question 6

Multiple Choice

If the adjusting entry to transfer Net Income/Owner's Equity into the owner's capital account is made prior to the end of the year, the Balance Sheet shows _______.

• A)Owner's Equity
• B)Net Income
• C)both Net Income and Owner's Equity
• D)none of the above because the income/earnings has been transferred into capital

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Definitions:

Bailee

An individual or party to whom personal property is entrusted for a specific purpose, with an obligation to return it to the bailor.

Conversion

The refusal to deliver up a chattel to its rightful owner by a bailee.

Liability

The state of being legally responsible for something, typically referring to the obligation to pay debts or damages.

Bailment

A legal relationship in which physical possession of personal property is transferred from one person to another with the understanding that the property will be returned.