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

Question

Quizplus · Accepted Answer

If equity at the beginning of the period is $100,000 and at the end of the period is $100,000, that means there is no change in equity during the period. If additional capital of $20,000 is paid into the business, it increases the equity to $120,000. Therefore, if there is no profit, there must be a loss of $20,000 to keep the equity at the same level as the beginning of the period. Thus, the correct answer is C, loss $20,000.

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