Assume a Company Has a Net Income That Exceeds the Owner's

question 66

Multiple Choice

Assume a company has a net income that exceeds the owner's drawing for the current year. The owner's Capital account

• A) will have a zero balance after the closing entries are completed.
• B) will increase.
• C) will decrease.
• D) will remain the same as the beginning balance.
• E) It is impossible to tell with the information provided.

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Definitions:

Minimum Wage

is the lowest legal salary that employers can pay workers, set by government law to protect workers from unduly low pay.

Price Support

Government intervention in a market to maintain the price at a certain level, usually done through the purchase of surplus stock or direct subsidies to producers.

Price Floor

A minimum price, set by law or regulation, that must be paid for a good or service; often implemented to protect producers.

Price Support

Government interventions in the market to maintain the price of a commodity at a certain level.