1. If beginning capital was $70,000, ending capital is $48,000, and the owner's withdrawals were $21,000, the amount of net income or net loss was
- net income of $42,000
- net income of $17,000
- net loss of $22,000
- net loss of $1,000
2. If total assets decreased by $88,000 during a period of time and owner's equity increased by $65,000 during the same period, then the amount and direction (increase or decrease) of the period's change in total liabilities is
- $23,000 increase
- $88,000 decrease
- $153,000 increase
- $153,000 decrease
3. A business paid $7,000 to a creditor in payment of an amount owed. The effect of the transaction on the accounting equation was to
- increase one asset, decrease another asset
- decrease an asset, decrease a liability
- increase an asset, increase a liability
- increase an asset, increase owner's equity
4. The business entity concept means that
- the owner is part of the business entity
- an entity is organized according to state or federal statutes
- an entity is organized according to the rules set by the FASB
- the entity is an individual economic unit for which data are recorded, analyzed, and reported
5. The assets and liabilities of the company are $175,000 and $40,000, respectively. Owner's equity should equal
- $215,000
- $135,000
- $175,000
- $40,000