Scott's Camera Shop started the year with total assets of $80 000 and total liabilities of $40 000. During the year, the business earned revenues of $120 000 and incurred expenses of $70 000. Scott made no capital contributions during the year, but did make withdrawals of $60 000. The net change in Scott's owners' equity for the year is a:

Question

Quizplus · Accepted Answer

The net income is $50,000 ($120,000 revenues - $70,000 expenses). Withdrawals were $60,000, so the net change in owner's equity is a $10,000 decrease ($50,000 net income - $60,000 withdrawals).

Scott's Camera Shop Started the Year with Total Assets of $80