QuickBooks Online: Owner's Equity

It is the amount of money an owner has invested in a business, minus the amount of money the owner has taken out of the business.

• Net Income
• Owner's Equity
• Owner's Capital
• Liabilities

Answer explanation

In essence, it is the amount of money that is left over for the owner after all liabilities have been removed from the assets.

1. What is the formula for calculating Owner's Equity?

• 1. Assets - Liabilities

• 1. Assets + Liabilities

• 1. Assets / Liabilities

• 1. Assets * Liabilities

Answer explanation

Owner's Equity is calculated as the difference between the total assets and total liabilities of a business.

2. Which of the following is considered an Owner's Equity account in QuickBooks Online?

• 2. Accounts Receivable

• 2. Accounts Payable

• 2. Owner's Draw

• 2. Inventory Asset

Answer explanation

Owner's Draw is an account that tracks withdrawals of the business's assets by the owner and is considered an equity account.

3. What is the effect of an Owner's Draw on the Owner's Equity?

• 3. It increases the Owner's Equity

• 3. It decreases the Owner's Equity

• 3. It has no effect on the Owner's Equity

• 3. t depends on the business type

Answer explanation

When an owner withdraws assets for personal use, it reduces the amount of assets in the business, thereby decreasing the Owner's Equity.

4. How can you increase the Owner's Equity in QuickBooks Online?

• 4. By recording more expenses

• 4. By recording more liabilities

• 4. By recording more income

• 4. By recording more assets

Answer explanation

Increasing income leads to an increase in assets, which in turn increases the Owner's Equity.

5. What is the effect of a profit on the Owner's Equity?

• 5. It increases the Owner's Equity

• 5. It decreases the Owner's Equity

• 5. It has no effect on the Owner's Equity

• 5. It depends on the business type

Answer explanation

A profit increases the total assets of the business, which in turn increases the Owner's Equity.

6. In QuickBooks Online, where can you find the Owner's Equity?

• 6. Profit and Loss Report

• 6. Balance Sheet Report

• 6. Vendor Report

• 6. Customer Report

Answer explanation

The Balance Sheet Report in QuickBooks Online provides information about the company's assets, liabilities, and Owner's Equity.

8. What is the effect of an Owner's Investment on the Owner's Equity?

• 8. It increases the Owner's Equity

• 8. It decreases the Owner's Equity

• 8. It has no effect on the Owner's Equity

• 8. It depends on the business type

Answer explanation

An Owner's Investment increases the total assets of the business, which in turn increases the Owner's Equity.

9. What is the effect of a dividend on the Owner's Equity?

• 9. It increases the Owner's Equity

• 9. It decreases the Owner's Equity

• 9. It has no effect on the Owner's Equity

• 9. It depends on the business type

Answer explanation

Dividends are distributions of earnings to owners, which decrease the Owner's Equity.

In QuickBooks Online, how do you record an Owner's Draw?

• By creating a new expense transaction

• By creating a new income transaction

• By creating a new equity transaction

• By creating a new liability transaction

Answer explanation

An Owner's Draw is recorded as an expense transaction in QuickBooks Online as it represents money taken out from the business by the owner.