Podcast
Questions and Answers
Which of the following is an Owner Contribution? (Select all that apply)
Which of the following is an Owner Contribution? (Select all that apply)
What accounts are affected when preparing the journal entry for an Owner Contribution of a Fixed Asset?
What accounts are affected when preparing the journal entry for an Owner Contribution of a Fixed Asset?
Debit Fixed Asset, Credit Owner Contribution
Which of the following is an Owner Distribution? (Select all that apply)
Which of the following is an Owner Distribution? (Select all that apply)
What type of account is the Owner Distribution account?
What type of account is the Owner Distribution account?
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What accounts are affected when an Owner receives a Fixed Asset from the business, assuming no accumulated depreciation of the asset?
What accounts are affected when an Owner receives a Fixed Asset from the business, assuming no accumulated depreciation of the asset?
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What is Retained Earnings?
What is Retained Earnings?
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What is the purpose of closing the Owner Distribution account each year?
What is the purpose of closing the Owner Distribution account each year?
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What accounts are affected when you prepare an Owner Distribution closing entry to Retained Earnings?
What accounts are affected when you prepare an Owner Distribution closing entry to Retained Earnings?
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Study Notes
Owner Contributions
- Owner Contributions refer to expenses paid personally by the owner for the business.
- They can also include assets given to the business by the owner.
- A deposit made by the owner into the business qualifies as an Owner Contribution.
Journal Entry for Owner Contribution of Fixed Asset
- When recording an Owner Contribution of a Fixed Asset, the Fixed Asset account is debited.
- The Owner Contribution account is credited during this transaction.
Owner Distributions
- Owner Distributions include assets taken from the business by the owner for personal use.
- They also encompass money withdrawn from the business that is not categorized as payroll.
Owner Distribution Account Type
- The Owner Distribution account falls under the category of Equity accounts in the financial statements.
Journal Entry for Owner Receiving Fixed Asset
- In the case of an Owner receiving a Fixed Asset from the business, the Owner Distribution account is debited.
- The Fixed Asset account is credited in this transaction, assuming no accumulated depreciation exists.
Retained Earnings
- Retained Earnings represent the total cumulative earnings accumulated from all previous fiscal years within the business.
Closing the Owner Distribution Account
- Closing the Owner Distribution account annually ensures clarity regarding the distributed amount in the current year's balance sheet.
Closing Entry to Retained Earnings
- When preparing the closing entry for Owner Distribution to Retained Earnings, the Retained Earnings account is debited.
- The Owner Distribution account is credited to reflect the transfer.
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Description
Test your understanding of owner contributions and distributions in business accounting. This quiz covers journal entries for both contributions of fixed assets and distributions made for personal use. Learn how these transactions affect equity accounts and the overall financial statements.
