Foxes Service Shop started the year with total assets of $320000 and total liabilities of $240000. During the year the business recorded $630000 in revenues $450000 in expenses and owner drawings of $60000. Owner's equity at the end of the year was
A) $80000.
B) $200000.
C) $310000.
D) $370000.

Question

Quizplus · Accepted Answer

Owner's equity at the beginning of the year is calculated as total assets minus total liabilities, which is $320,000 - $240,000 = $80,000. During the year, the net income is $630,000 (revenues) - $450,000 (expenses) = $180,000. The owner's equity increases by the net income and decreases by the owner's drawings: $80,000 + $180,000 - $60,000 = $200,000.

Foxes Service Shop Started the Year with Total Assets of $320000