Which account is Owner's Equity?

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Study for the Accounting CBE Exam. Gain insights with flashcards and multiple-choice questions, each paired with detailed explanations. Prepare for your accounting certification!

Multiple Choice

Which account is Owner's Equity?

Explanation:
Owner's equity represents the owner’s claim on the business after debts are paid. The Capital account records the owner's investment in the business and sits in the Owner’s Equity section of the balance sheet. Therefore, the account named with the owner’s capital is the Owner’s Equity account. Advertising Expense is an expense and reduces equity, Fees Earned is revenue and, while it increases equity, is classified as revenue rather than an Owner’s Equity account, and Supplies is an asset. So the Capital account is the correct choice.

Owner's equity represents the owner’s claim on the business after debts are paid. The Capital account records the owner's investment in the business and sits in the Owner’s Equity section of the balance sheet. Therefore, the account named with the owner’s capital is the Owner’s Equity account. Advertising Expense is an expense and reduces equity, Fees Earned is revenue and, while it increases equity, is classified as revenue rather than an Owner’s Equity account, and Supplies is an asset. So the Capital account is the correct choice.

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