Question

The beginning balance in the​ Lopez, Capital account of a company was $ 13 comma 000. The revenues and expenses were $ 220 comma 000 and $ 150 comma 000​, respectively. During the​ year, Lopez took withdrawals of $ 5 comma 000. There were no new capital contributions during the year. The ending balance in​ Lopez, Capital was $ 83 comma 000.
a. True.
b. False.

Answer 1

Answer:

a. True

Explanation:

The capital account of a soul proprietor is similar to the equity account of a company. It shows  how much the business owes the owner.

This includes the amount invested and net income over the years posted as part of the retained earnings.

Net income is the difference between the total revenue and total expenses.

Net income = $220,000 - $150,000

= $70,000

Net balance in capital account = $13,000 + $70,000

= $83,000