Companies Arrange the Ledger in This Sequence

question 118

Multiple Choice

Companies arrange the ledger in this sequence:

• A) assets, liabilities, owner's capital, owner's drawings, revenues, expenses.
• B) revenues, expenses, assets, liabilities, owner's capital, owner's drawings.
• C) assets, revenues, liabilities, expenses, owner's capital, owner's drawings.
• D) owner's capital, owner's drawings, assets, liabilities, revenues, expenses.

---

Definitions:

Non-recognition of Gain

A tax principle that allows taxpayers to defer recognition of capital gains taxes if the gains are reinvested in similar property or under certain qualifying exchanges.

Involuntary Conversion

Involuntary Conversion is the process where property or an asset is destroyed, stolen, confiscated, or condemned, and the owner receives compensation, such as insurance proceeds or condemnation awards.

Gain

An increase in wealth, income, or value, often realized from investments or sales of assets.

Election

A decision made by taxpayers regarding the treatment of certain tax items, such as choosing a filing status or opting for a standard or itemized deduction.