If equity at the beginning of the period is $100,000 and at the end of the period is $90,000, and additional capital of $20,000 is paid into the business by the owner during the period, profit or loss is:
A) profit $30,000
B) loss $30,000
C) loss $10,000
D) profit $10,000

Question

Quizplus · Accepted Answer

The equity decreased from $100,000 to $90,000, but there was an additional capital injection of $20,000. Without the capital injection, the equity would have been $70,000 ($90,000 - $20,000), indicating a $30,000 decrease from the original $100,000, which represents a loss of $30,000.

If Equity at the Beginning of the Period Is $100,000