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Owner Distribution Is What Kind Of Account? Owner Distribution is an Equity Account (D option is correct), as it is paid to business owners out of the profits retained in the business as a claim or rights of the owners of the business against the assets of the business. Owners get the share of their investment in the business. For example, three (3) owners are given $500 (5% of $10000), $200 (2% of $10000) and $100 (1% of $10000) according to their share of investments in the business. When the business is in profit, then it is favorable to give the return of share to owners. However, in case of loss, it is not considered as an ideal situation to distribute the amount of cash to owners for the investment made in the business as the funds are needed to carry on the business and to sustain and maintain the business. Owner distribution is recorded on balance sheet as a deduction from owners equity. Difference Between Owner Distribution And Dividend In case of profits, Dividend

Solution Of Multiple Choice Question (MCQ) The correct answer is d). $9000, as the client paid the company the full $12000 ($1000 per month) which is $9000 for 9 months from 1 st January to 30 th September. The Revenue earned by the company for 3 months (1 st October to 31 st December) is $3000. So remaining $9000 is Unearned Revenue as the services yet to be performed for the 9 remaining months from 1 st January to 30 th September against which the company received the payment. The adjusting entry to record unearned revenue for 31 st December is shown below:                        Unearned Revenue a/c  $3000                                                                 Revenue a/c  $3000                               (Unearned Revenue Now Earned For The Period Of 3 Months) The balance of Unearned Revenue is $9000 on 31 st December i.e., $12000 - $3000 = $9000.

Answer To The Question The journal entry is to debit Legal Expenses Account of $4000 and credit Accounts Payable Account Or Sundry Creditors Account of $4000, as the legal firm earns revenue by rendering services to you (client) but the payment is not received from you for Legal Services performed. The legal services provided by the legal firm are legal expenses for you (client). So, from the point of view of client, legal expenses are debited as these are increased while accounts payable account is credited as the client is bound by law to pay for the services rendered by the legal firm. So, the Liability Account i.e., Accounts Payable Account are increased according to Rules of Debit and Credit. This journal entry is made on Accrual Basis of Accounting in which a journal entry is recorded whether the cash is paid or not, received or not. When the company incurred expenses or earned revenues, we record in the books of accounts.