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:

Visible Outcome

A result or effect of an action, process, or situation that is noticeable and can be seen or perceived.

Employee

A person who is hired to provide services to a company on a regular basis in exchange for compensation.

Second-Level Outcome

A consequence or result that is one step removed from the immediate outcome, often more abstract or long-term in nature.

Expectancy Model

A psychological theory that states an individual's motivation is related to their expectation of achieving desired outcomes as a result of their effort.