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Problem 1: Which of the following statements regarding owner's capital is not valid?
a. It is increased by investments to the business by the owner.
b. It is increased by income earned by the business.
c. It is increased by distributions to the owners (drawings by owners).
d. It is decreased by expenses incurred by the busines
Problem 2: If total debits exceed total credits in the balance sheet columns of a worksheet, there is
a. profit.
b. loss.
c. owner's drawings.
d. an error.
Problem 3: The ending equity is ?9,000. If total income for the period is ?5,000 while total expenses are ?8,000, how much is the beginning balance of equity?
a. 12,000
b. 9,000
c. 6,000
d. 0
Financial Statement Analysis and Preparation
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