The Effect on the Statement of Financial Position When the Owner

question 70

Multiple Choice

The effect on the statement of financial position when the owner contributes her private vehicle for the exclusive use of the business is:

• A)increase asset vehicle; increase equity.
• B)increase asset vehicle; decrease equity.
• C)increase asset vehicle; increase owner's drawings.
• D)none of the above.

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Definitions:

Cheques

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or to a specified person, out of the drawer's bank account.

Clearing

The process of reconciling purchases and sales of various securities, commodities, or currencies and ensuring the correct transfer of funds.

Collection Float

The time period between when a check is deposited into a bank account and the funds become available.

Ledger Balance

represents the total balance in a general ledger account at the beginning of each day, including all transactions that have been posted.