Question

What is the purpose of the owner capital account in the closing process? a.Owner capital is used to verify that net income or loss is reported correctly. b.Owner capital is a clearing account used to zero out all real accounts. c.Owner capital is used as a temporary account. d.Owner capital is where the period's net income or loss is transferred.

Answer 1

Answer:

d.Owner capital is where the period's net income or loss is transferred.

Explanation:

The owner capital account which is also known as 'retained earnings' is a balance sheet account where the organisation's profits / net income or losses are transferred. Net incomes will increase the owner capital account while losses will reduce the owner capital account.

Based on the above, option d is the correct answer.