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15. What is the correct formula to calculate net (or take-home) pay for an employee for a pay period?
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4. Merchandising Operations
Net Sales
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All of the following increase owner's equity except which one?
A
Owner investments
B
Net sales revenue
C
Net income
D
Owner withdrawals
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Understand the concept of owner's equity: Owner's equity represents the owner's claim on the assets of the business after liabilities are deducted. It is affected by various transactions and events.
Identify the factors that increase owner's equity: Owner investments, net sales revenue, and net income all contribute to increasing owner's equity. Owner investments add capital to the business, net sales revenue contributes to profitability, and net income reflects the overall earnings of the business.
Recognize the factor that decreases owner's equity: Owner withdrawals (also known as drawings) reduce owner's equity because they represent the owner taking assets out of the business for personal use.
Compare the options provided: Owner investments, net sales revenue, and net income all increase owner's equity, while owner withdrawals decrease it.
Conclude that the correct answer is 'Owner withdrawals,' as it is the only option that does not increase owner's equity.
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