Jackson's Small Engine Repair Shop, a proprietorship, started the year with total assets of $60,000 and total liabilities of $40,000. During the year, the business recorded $100,000 in repair revenues, $55,000 in expenses, and Mike Jackson, the owner, withdrew $10,000. The profit reported by Jackson's Small Engine Repair Shop for the year was

Question

Quizplus · Accepted Answer

Profit is calculated as revenues minus expenses. Here, $100,000 in revenues minus $55,000 in expenses equals $45,000 in profit. The starting assets, liabilities, and owner's withdrawals do not affect the profit calculation.

Jackson's Small Engine Repair Shop, a Proprietorship, Started the Year