Net Income Is $29,000

question 146

Multiple Choice

Net income is $29,000.Beginning capital balance was $34,000.Ending capital balance was $55,000.No capital contributions were made by the owner during the year.What amount of drawings was made?

• A) $18,000
• B) $8,000
• C) $5,000
• D) $60,000

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Definitions:

Pollution Permits

Legal rights granted by governments to emit a specific amount of pollutants into the environment.

Corrective Tax

A tax designed to incentivize socially desirable behavior, often used to correct for the negative externalities of an action or consumption.

Coase Theorem

A principle that asserts that if private parties can bargain over the allocation of resources without cost, they can solve the problem of externalities on their own.

Externalities

Economic outcomes that impact third parties not directly involved, which can either be advantageous or disadvantageous.