Following Is a List of Account Balances (Except for Owner's

question 96

Multiple Choice

Following is a list of account balances (except for owner's capital) of Wilson Mowing Service as of December 31 of the first year of operation: The proprietor, J.D. Wilson, contributed $3,000 at the beginning of the year; during the year, the proprietor made $12,000 in drawings.
At the end of the year, what is the amount of total owner's equity?

• A)$11,900
• B)$24,100
• C)$21,200
• D)$12,200

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Consideration

In legal and accounting terms, it refers to the value, either monetary or a promise of action, that is exchanged between parties in a contract.

Residual Value

the estimated value that an asset will have at the end of its useful life.

Straight-Line Method

A depreciation technique that allocates an equal portion of an asset’s initial cost to each year of its useful life.