Identify the Item That Would Appear in the Equity Section

question 34

Multiple Choice

Identify the item that would appear in the equity section of the statement of financial position.

• A) Loan from ABC Bank.
• B) Loan to family member.
• C) Bank overdraft.
• D) Drawings by the owner.

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Definitions:

Trade Discount

A reduction from the list price granted by a seller to a buyer, often based on the volume of goods purchased or to promote sales.

Cash Payment

A transaction in which payment for goods or services is made in cash at the time of purchase.

FOB Shipping Point

A term indicating that the buyer takes responsibility for goods once they are shipped, including paying for shipping costs and bearing the risk of loss.

Prepaid Freight

Costs paid in advance for the transportation of goods, which is often recorded as a prepaid expense on the balance sheet.