During 2010, a company's assets rise $56,000 and its liabilities rise $38,000. If no dividend is paid and no further capital is contributed, net income for 2010 was:

Question

Quizplus · Accepted Answer

Since assets increased by $56,000 and liabilities increased by $38,000, the remaining amount of $18,000 must be attributed to the owner's equity. This $18,000 increase in owner's equity is equal to the company's net income for the year. Therefore, the answer is B) $18,000.

During 2010, a Company's Assets Rise $56,000 and Its Liabilities