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 additional capital contributions during the year, but did make withdrawals of $60,000. Calculate Scott's net income for the year.
A)$50,000
B)$120,000
C)$70,000
D)$80,000

Question

Quizplus · Accepted Answer

Net income is calculated as revenues minus expenses, which in this case is $120,000 - $70,000 = $50,000. 
Scott's withdrawals of $60,000 are not factored into the calculation of net income.

Scott's Camera Shop Started the Year with Total Assets of $80,000