Question

current attempt in progress
owner’s equity is decreased by
liabilities.
expenses.
revenues.
assets.

Explanation:

To determine what decreases owner’s equity, recall the accounting equation and equity components. Revenues increase equity (as they add to net income, which affects retained earnings/equity). Assets and liabilities are part of the accounting equation (\( \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \)) but don’t directly decrease equity in the same way. Expenses reduce net income (since net income = revenues - expenses), and a lower net income (or net loss) decreases owner’s equity (through retained earnings). Liabilities are separate from equity’s direct decrease; assets are what the company owns, not a direct equity decreaser.

Answer:

B. expenses