When Building a Home-Based Business,it Is Important That the Entrepreneur

question 16

Multiple Choice

When building a home-based business,it is important that the entrepreneur:

• A)keep friends and neighbors from disturbing him/her while working at home.
• B)not discuss it with the family to avoid raising expectations and creating undue pressure.
• C)have all business mail sent to the home address.
• D)not take the home office deduction to avoid IRS scrutiny of his/her tax return.

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Definitions:

Owner's Capital Account

An equity account on the balance sheet representing the owner's total investment in the business minus any withdrawals.

Temporary Accounts

Accounts that are closed at the end of each accounting period; examples include revenue, expense, and dividend accounts.

Owner's Capital Account

An account that represents the total equity or ownership interest of the owner(s) in a business, reflecting contributions and withdrawals.

Closing Entries

Entries recorded at the conclusion of an accounting cycle to shift balances from temporary to permanent accounts.